þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 72-0654145 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA 19112 | ||
(Address of principal executive offices) (Zip code) | ||
(215) 546-5005 | ||
(Registrant's telephone number, including area code) |
Large accelerated filer | o | Accelerated filer | þ | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page | ||
PART I | ||
Item 1: | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 2: | ||
Item 6: | ||
March 31, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash | $ | 18,348 | $ | 24,132 | |||
Restricted cash | 1,044 | 937 | |||||
Receivables | 3,082 | 3,228 | |||||
Loans and receivables from managed entities and related parties, net | 22,427 | 26,667 | |||||
Investments in real estate, net | 15,752 | 16,022 | |||||
Investment securities, at fair value | 44,758 | 45,672 | |||||
Investments in unconsolidated loan manager | 31,512 | 32,616 | |||||
Investments in unconsolidated entities | 21,168 | 17,553 | |||||
Property and equipment, net | 5,061 | 5,371 | |||||
Deferred tax assets, net | 27,653 | 29,264 | |||||
Other assets | 13,781 | 9,733 | |||||
Total assets | $ | 204,586 | $ | 211,195 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Accrued expenses and other liabilities | $ | 22,502 | $ | 27,184 | |||
Payables to managed entities and related parties | 2,811 | 3,145 | |||||
Borrowings | 20,597 | 20,747 | |||||
Total liabilities | 45,910 | 51,076 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none outstanding | — | — | |||||
Common stock, $.01 par value, 49,000,000 shares authorized; 35,866,472 and 34,973,987 shares issued (including nonvested restricted stock of 1,778,341 and 1,095,238), respectively | 348 | 339 | |||||
Additional paid-in capital | 312,432 | 311,491 | |||||
Accumulated deficit | (28,783 | ) | (30,676 | ) | |||
Treasury stock, at cost; 15,029,534 and 14,460,024 shares, respectively | (143,204 | ) | (139,858 | ) | |||
Accumulated other comprehensive loss | (4,853 | ) | (3,533 | ) | |||
Total stockholders’ equity | 135,940 | 137,763 | |||||
Noncontrolling interests | 22,736 | 22,356 | |||||
Total equity | 158,676 | 160,119 | |||||
Total liabilities and equity | $ | 204,586 | $ | 211,195 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
REVENUES: | |||||||
Real estate | $ | 19,163 | $ | 16,966 | |||
Financial fund management | 6,729 | 6,875 | |||||
Commercial finance | 76 | (2 | ) | ||||
Total revenues | 25,968 | 23,839 | |||||
COSTS AND EXPENSES: | |||||||
Real estate | 11,018 | 11,499 | |||||
Financial fund management | 3,680 | 3,063 | |||||
Commercial finance | 392 | 579 | |||||
General and administrative | 4,883 | 3,297 | |||||
Provision for credit losses | 109 | 402 | |||||
Depreciation and amortization | 504 | 457 | |||||
Total expenses | 20,586 | 19,297 | |||||
OPERATING INCOME (LOSS) | 5,382 | 4,542 | |||||
OTHER INCOME (EXPENSE): | |||||||
Gain (loss) on sale of investment securities, net | 498 | — | |||||
Impairment on investments in available for sale securities | (98 | ) | — | ||||
Interest expense | (440 | ) | (421 | ) | |||
Other income (expense), net | 507 | 314 | |||||
Total other income (expense) | 467 | (107 | ) | ||||
Income (loss) from continuing operations before taxes | 5,849 | 4,435 | |||||
Income tax provision (benefit) | 2,446 | 1,244 | |||||
Net income (loss) | 3,403 | 3,191 | |||||
Net (income) loss attributable to noncontrolling interests | (366 | ) | (1,657 | ) | |||
Net income (loss) attributable to common shareholders | $ | 3,037 | $ | 1,534 | |||
Basic earnings (loss) per share: | |||||||
Net income (loss) | $ | 0.15 | $ | 0.07 | |||
Weighted average shares outstanding | 20,611 | 22,965 | |||||
Diluted earnings (loss) per share: | |||||||
Net income (loss) | $ | 0.15 | $ | 0.07 | |||
Weighted average shares outstanding | 20,889 | 23,239 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net income (loss) | $ | 3,403 | $ | 3,191 | |||
Other comprehensive income (loss): | |||||||
Unrealized gains (losses) on investment securities available-for-sale, net of tax of $(849) and $(498) | (1,390 | ) | (656 | ) | |||
Less: reclassification for (gains) losses realized, net of tax of $0 and $(172) | — | (285 | ) | ||||
(1,390 | ) | (941 | ) | ||||
Minimum pension liability adjustments, net of tax of $0 and $9 | — | (9 | ) | ||||
Less: reclassification for (gains) losses realized, net of tax of $51 and $50 | 70 | 56 | |||||
70 | 47 | ||||||
Foreign currency translation adjustments, net of tax of $2 and $2 | — | 2 | |||||
Subtotal - other comprehensive income (loss) | (1,320 | ) | (892 | ) | |||
Comprehensive income (loss) attributable to common shareholders | $ | 2,083 | $ | 2,299 |
Common Stock Shares | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||
Balance, January 1, 2016 | 20,513,963 | $ | 339 | $ | 311,491 | $ | (30,676 | ) | $ | (139,858 | ) | $ | (3,533 | ) | $ | 137,763 | $ | 22,356 | $ | 160,119 | ||||||||||||||
Net income (loss) | — | — | — | 3,037 | — | — | 3,037 | 366 | 3,403 | |||||||||||||||||||||||||
Treasury shares issued | 31,600 | — | (161 | ) | — | 302 | — | 141 | — | 141 | ||||||||||||||||||||||||
Stock-based compensation | 892,485 | 9 | 1,102 | — | — | — | 1,111 | — | 1,111 | |||||||||||||||||||||||||
Repurchases of common stock | (601,110 | ) | — | — | — | (3,648 | ) | — | (3,648 | ) | — | (3,648 | ) | |||||||||||||||||||||
Dividends declared on common stock | — | — | — | (1,144 | ) | — | — | (1,144 | ) | — | (1,144 | ) | ||||||||||||||||||||||
Other | — | — | — | — | — | — | — | 14 | 14 | |||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | (1,320 | ) | (1,320 | ) | — | (1,320 | ) | ||||||||||||||||||||||
Balance, March 31, 2016 | 20,836,938 | $ | 348 | $ | 312,432 | $ | (28,783 | ) | $ | (143,204 | ) | $ | (4,853 | ) | $ | 135,940 | $ | 22,736 | $ | 158,676 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | 3,403 | $ | 3,191 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 524 | 475 | |||||
Provision for credit losses | 109 | 402 | |||||
Unrealized (gain) loss on trading securities | — | (776 | ) | ||||
Equity in (earnings) losses of unconsolidated entities | (3,133 | ) | (2,350 | ) | |||
Distributions from unconsolidated entities | 5,029 | 2,151 | |||||
(Gain) loss on sales of leases and loans | (18 | ) | — | ||||
Impairment on investments in available for sale securities | 98 | — | |||||
(Gain) loss on sales of investment securities, net | (498 | ) | — | ||||
Deferred income tax provision (benefit) | 2,409 | 1,339 | |||||
Equity-based compensation issued | 951 | 744 | |||||
(Gain) loss on trading securities | (714 | ) | (595 | ) | |||
Trading securities purchases and sales, net | (1,606 | ) | (8,847 | ) | |||
Changes in operating assets and liabilities | (3,840 | ) | (2,100 | ) | |||
Net cash provided by (used in) operating activities | 2,714 | (6,366 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | (48 | ) | (997 | ) | |||
Investments in real estate and unconsolidated real estate entities | (3,540 | ) | (21 | ) | |||
Principal payments on leases and loans | 18 | 3 | |||||
Purchase of loans and investments | (732 | ) | (819 | ) | |||
Proceeds from sale of loans and investments | 666 | 454 | |||||
Net cash provided by (used in) investing activities | (3,636 | ) | (1,380 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Increase (decrease) in borrowings | — | 881 | |||||
Principal payments on borrowings | (149 | ) | (120 | ) | |||
Dividends paid | (1,132 | ) | (1,312 | ) | |||
Proceeds from issuance of common stock | — | 1 | |||||
Repurchases of common stock | (3,474 | ) | (2,108 | ) | |||
(Increase) decrease in restricted cash | (107 | ) | (74 | ) | |||
Contributions from non-controlling interests - Pelium | — | 4,052 | |||||
Net cash provided by (used in) financing activities | (4,862 | ) | 1,320 | ||||
Increase (decrease) in cash | (5,784 | ) | (6,426 | ) | |||
Cash, beginning of year | 24,132 | 33,947 | |||||
Cash, end of period | $ | 18,348 | $ | 27,521 |
• | Resource Real Estate Advisor, LLC manages the activities of Resource Real Estate Opportunity REIT I ("Opportunity REIT I") a public non-traded REIT, which completed its initial public offering in December 2013 having raised a total of $635.0 million. As of March 31, 2016, the Opportunity REIT I manages a portfolio consisting of value-add residential multifamily rental properties and loans valued at $1.0 billion; |
• | Resource Real Estate Advisor II, LLC manages the activities of Resource Real Estate Opportunity REIT II ("Opportunity REIT II"), a public non-traded REIT, which completed its initial public offering in February 6, 2016 having raised a total of $556.0 million. This fund focuses on acquiring a portfolio consisting of value-add residential multifamily rental properties and loans. As of March 31, 2016, Opportunity REIT II manages a portfolio consisting of value-add residential multifamily rental properties and loans valued at $634.9 million; |
• | Resource Innovation Office Advisor, LLC manages Resource Innovation Office REIT, Inc. ("Innovation Office REIT"), a public non-traded REIT, filed an amended initial public offering of up to $1.0 billion in its common stock at a maximum price of $10.27 for Class A shares and $10.00 for Class T shares. A post-effective amendment related to securities offered by this fund was declared effective by the SEC on March 7, 2016. The Innovation Office REIT will focus on acquiring office properties and real estate debt secured by office properties; |
• | Resource Capital Partners, Inc. acts as the general partner manager and managing member of, and provides asset management services to, the Company's five real estate investment partnerships and three tenant-in-common ("TIC") programs; |
• | Resource Real Estate Management, Inc. (“Resource Residential”) provides property management services to the Company's multifamily apartment portfolio; |
• | Resource Real Estate Funding, Inc., on behalf of Resource Capital Corp., ("RSO") (NYSE:RSO), a diversified real estate finance company that conducts its business so as to qualify as a real estate investment trust ("REIT"), manages a commercial real estate debt portfolio comprised principally of first priority interest in commercial mortgage loans ("A notes"), whole mortgage loans, mortgage participations, subordinated interests in commercial mortgage loans ("B notes"), mezzanine debt and related commercial real estate securities. In addition, it manages a separate portfolio of discounted real estate and real estate loans; |
• | Pearlmark Real Estate, LLC ("Pearlmark"), a joint venture in which the Company owns a 50% interest, manages institutional real estate investments. Pearlmark is in the process of fundraising for its first real estate investment fund and another managed entity that is in the formation stage; and |
• | Resource Real Estate, Inc. manages owned assets and ventures, which are collectively referred to as the “legacy portfolio.” |
• | CVC Credit Partners ("CVC Credit Partners"), a joint venture between the Company and an unrelated third-party, finances, structures and manages investments in bank loans, high yield bonds and equity investments through collateralized loan obligation issuers ("CLOs"), managed accounts and three credit opportunity funds; |
• | Resource Capital Manager, Inc. ("RCM"), an indirect wholly-owned subsidiary, provides investment management and administrative services to RSO under a management agreement between the Company, RCM and RSO ("the RCM Agreement"); |
• | Resource Capital Markets, Inc. ("Resource Capital Markets"), through the Company's registered broker-dealer subsidiary, Resource Securities, Inc., acts as an agent in the primary and secondary markets for structured finance securities and transactions; |
• | Northport Capital, LLC ("Northport"), provides middle market loan origination, management and monitoring services to RSO under the RCM Agreement; |
• | Trapeza Capital Management, LLC ("TCM"), a joint venture between the Company and an unrelated third-party, manages investments in trust preferred securities and senior debt securities of banks, bank holding companies, insurance companies and other financial companies through collateralized debt obligation ("CDO") issuers. TCM, together with the Trapeza CDO issuers, are collectively referred to as Trapeza; |
• | Ischus Capital Management, LLC ("Ischus") manages legacy CDOs it sponsored, which hold investments in asset-backed securities ("ABS") including residential mortgage-backed securities ("RMBS") and commercial mortgage-backed securities, ("CMBS"); |
• | Resource Financial Institutions Group, Inc. (“RFIG”), serves as the general partner for seven company-sponsored affiliated partnerships which invest in financial institutions; and |
• | Pelium Capital Management, LLC, serves as the manager for Pelium Capital Partners, LP ("Pelium"), a hedge fund with primary holdings in CDO/CLO note and equity positions, CMBS and warehouse facilities. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Cash (paid) received: | |||||||
Interest | $ | (401 | ) | $ | (399 | ) | |
Income tax payments | (1,728 | ) | (65 | ) | |||
Refund of income taxes | — | 44 | |||||
Dividends declared per common share | $ | 0.06 | $ | 0.05 | |||
Non-cash activities: | |||||||
Repurchase of common stock from employees in exchange for the payment of income taxes | $ | 174 | $ | 165 | |||
Issuance of treasury stock for the Company's investment savings 401(k) plan | 302 | 150 |
Current | 30-89 Days Past Due | 90-180 Days Past Due | Greater than 181 Days | Total Past Due | Total | ||||||||||||||||||
Loans and receivables from managed entities and related parties: | |||||||||||||||||||||||
Commercial finance investment entities | $ | — | $ | 18 | $ | 60 | $ | 966 | $ | 1,044 | $ | 1,044 | |||||||||||
Real estate investment entities | 3,832 | 330 | 755 | 9,397 | 10,482 | 14,314 | |||||||||||||||||
Financial fund management entities | 1,191 | 31 | 28 | 21 | 80 | 1,271 | |||||||||||||||||
RSO | 2,888 | — | — | — | — | 2,888 | |||||||||||||||||
Other | 2,910 | — | — | — | — | 2,910 | |||||||||||||||||
10,821 | 379 | 843 | 10,384 | 11,606 | 22,427 | ||||||||||||||||||
Rent receivables - real estate | 192 | 1 | 1 | 5 | 7 | 199 | |||||||||||||||||
Total financing receivables | $ | 11,013 | $ | 380 | $ | 844 | $ | 10,389 | $ | 11,613 | $ | 22,626 |
Current | 30-89 Days Past Due | 90-180 Days Past Due | Greater than 181 Days | Total Past Due | Total | ||||||||||||||||||
Loans and receivables from managed entities and related parties: | |||||||||||||||||||||||
Commercial finance investment entities | $ | — | $ | 16 | $ | 73 | $ | 1,200 | $ | 1,289 | $ | 1,289 | |||||||||||
Real estate investment entities | 7,909 | 392 | 890 | 11,955 | 13,237 | 21,146 | |||||||||||||||||
Financial fund management entities | 1,582 | — | — | — | — | 1,582 | |||||||||||||||||
RSO | 2,331 | — | — | — | — | 2,331 | |||||||||||||||||
Other | 319 | — | — | — | — | 319 | |||||||||||||||||
12,141 | 408 | 963 | 13,155 | 14,526 | 26,667 | ||||||||||||||||||
Rent receivables - real estate | 192 | 8 | 2 | 4 | 14 | 206 | |||||||||||||||||
Total financing receivables | $ | 12,333 | $ | 416 | $ | 965 | $ | 13,159 | $ | 14,540 | $ | 26,873 |
Receivables from Managed Entities | Leases and Loans | Rent Receivables | Total | ||||||||||||
Three Months Ended March 31, 2016: | |||||||||||||||
Balance, beginning of period | $ | — | $ | 130 | $ | 5 | $ | 135 | |||||||
Provision for (reversal) of credit losses | — | 105 | 4 | 109 | |||||||||||
(Charge-offs) recoveries | — | (242 | ) | — | (242 | ) | |||||||||
Recoveries | — | 27 | — | 27 | |||||||||||
Balance, end of period | $ | — | $ | 20 | $ | 9 | $ | 29 | |||||||
Ending balance, individually evaluated for impairment | $ | — | $ | 20 | $ | 9 | $ | 29 | |||||||
Ending balance, collectively evaluated for impairment | — | — | — | — | |||||||||||
Balance, end of period | $ | — | $ | 20 | $ | 9 | $ | 29 | |||||||
Three Months Ended March 31, 2015 | |||||||||||||||
Balance, beginning of period | $ | 16,990 | $ | — | $ | — | $ | 16,990 | |||||||
Provision for (reversal) of credit losses | 369 | 32 | 1 | 402 | |||||||||||
(Charge-offs) recoveries | — | (32 | ) | — | (32 | ) | |||||||||
Balance, end of period | $ | 17,359 | $ | — | $ | 1 | $ | 17,360 | |||||||
Ending balance, individually evaluated for impairment | $ | 17,359 | $ | — | $ | 1 | $ | 17,360 | |||||||
Ending balance, collectively evaluated for impairment | — | — | — | — | |||||||||||
Balance, end of period | $ | 17,359 | $ | — | $ | 1 | $ | 17,360 |
As of March 31, 2016: | Receivables from Managed Entities | Rent Receivables | Total | ||||||||
Ending balance, individually evaluated for impairment | $ | 22,427 | $ | — | $ | 22,427 | |||||
Ending balance, collectively evaluated for impairment | — | 199 | 199 | ||||||||
Balance, end of period | $ | 22,427 | $ | 199 | $ | 22,626 |
As of December 31, 2015: | |||||||||||
Ending balance, individually evaluated for impairment | $ | 26,667 | $ | — | $ | 26,667 | |||||
Ending balance, collectively evaluated for impairment | — | 206 | 206 | ||||||||
Balance, end of year | $ | 26,667 | $ | 206 | $ | 26,873 |
Net Balance | Unpaid Balance | Specific Allowance | Average Investment in Impaired Assets | ||||||||||||
As of March 31, 2016: | |||||||||||||||
Financing receivables with a specific valuation allowance: | |||||||||||||||
Rent receivables – real estate | $ | — | $ | — | $ | 9 | $ | — | |||||||
As of December 31, 2015: | |||||||||||||||
Financing receivables with a specific valuation allowance: | |||||||||||||||
Loans and receivables from managed entities – commercial finance | $ | — | $ | — | $ | — | $ | 13,788 | |||||||
Rent receivables – real estate | — | — | 5 | — |
March 31, 2016 | December 31, 2015 | ||||||
Properties owned, net of accumulated depreciation of $9,894 and $9,752: | |||||||
Hotel property (Savannah, Georgia) | $ | 9,456 | $ | 9,757 | |||
Office building (Philadelphia, Pennsylvania) | 861 | 877 | |||||
10,317 | 10,634 | ||||||
Partnerships and other investments | 5,435 | 5,388 | |||||
Total investments in real estate, net | $ | 15,752 | $ | 16,022 |
2017 | $ | 1,010 | |
2018 | 1,038 | ||
2019 | 960 | ||
2020 | 689 | ||
2021 | 566 | ||
Thereafter | 315 | ||
Total | $ | 4,578 |
March 31, 2016 | December 31, 2015 | ||||||
Available-for-sale securities | $ | 17,706 | $ | 19,509 | |||
Trading securities | 1,442 | 1,451 | |||||
Trading securities - Pelium | 25,610 | 24,712 | |||||
Total investment securities, at fair value | $ | 44,758 | $ | 45,672 |
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
As of March 31, 2016: | |||||||||||||||
CLO securities | $ | 7,912 | $ | 111 | $ | (229 | ) | $ | 7,794 | ||||||
Equity securities | 12,784 | (2,872 | ) | 9,912 | |||||||||||
Total | $ | 20,696 | $ | 111 | $ | (3,101 | ) | $ | 17,706 | ||||||
As of December 31, 2015: | |||||||||||||||
CLO securities | $ | 7,585 | $ | 928 | $ | (66 | ) | $ | 8,447 | ||||||
Equity securities | 12,784 | 12 | (1,734 | ) | 11,062 | ||||||||||
Total | $ | 20,369 | $ | 940 | $ | (1,800 | ) | $ | 19,509 |
Less than 12 Months | More than 12 Months | ||||||||||||||||||||
Fair Value | Unrealized Losses | Number of Securities | Fair Value | Unrealized Losses | Number of Securities | ||||||||||||||||
March 31, 2016 | |||||||||||||||||||||
CLO securities | $ | 4,292 | $ | (170 | ) | 8 | $ | 727 | $ | (59 | ) | 2 | |||||||||
Equity securities | 1,823 | (68 | ) | 2 | 8,048 | (2,804 | ) | 1 | |||||||||||||
Total | $ | 6,115 | $ | (238 | ) | 10 | $ | 8,775 | $ | (2,863 | ) | 3 | |||||||||
December 31, 2015 | |||||||||||||||||||||
CLO securities | $ | 2,033 | $ | (38 | ) | 3 | $ | 805 | $ | (28 | ) | 2 | |||||||||
Equity securities | 1,814 | (10 | ) | 2 | 9,128 | (1,724 | ) | 1 | |||||||||||||
Total | $ | 3,847 | $ | (48 | ) | 5 | $ | 9,933 | $ | (1,752 | ) | 3 |
Less than 12 Months | More than 12 Months | ||||||||||||||||||||
Fair Value | Unrealized Losses | Number of Securities | Fair Value | Unrealized Losses | Number of Securities | ||||||||||||||||
March 31, 2016: | |||||||||||||||||||||
CDO Securities | $ | 6,128 | $ | (1,043 | ) | 16 | $ | 2,166 | $ | (615 | ) | 10 | |||||||||
CMBS | 3,355 | (1,272 | ) | 6 | — | — | — | ||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total | $ | 9,483 | $ | (2,315 | ) | 22 | $ | 2,166 | $ | (615 | ) | 10 | |||||||||
December 31, 2015: | |||||||||||||||||||||
CDO Securities | $ | 10,156 | $ | (3,312 | ) | 18 | $ | 1,183 | $ | (503 | ) | 7 | |||||||||
CMBS | 2,940 | (1,278 | ) | 5 | — | — | — | ||||||||||||||
Other | 2,857 | (143 | ) | 2 | — | — | — | ||||||||||||||
Total | $ | 15,953 | $ | (4,733 | ) | 25 | $ | 1,183 | $ | (503 | ) | 7 |
Range of Combined Ownership Interests | March 31, 2016 | December 31, 2015 | |||||||
Real estate investment entities | 1% – 8% | $ | 13,717 | $ | 10,169 | ||||
Financial fund management partnerships | 0.01% − 50% | 6,700 | 6,754 | ||||||
Trapeza entities | 33% − 50% | 751 | 630 | ||||||
Investments in unconsolidated entities | $ | 21,168 | $ | 17,553 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Management fee revenues | $ | 19,961 | $ | 16,738 | |||
Costs and expenses | (16,146 | ) | (14,809 | ) | |||
Net income | $ | 3,815 | $ | 1,929 | |||
Portion of net income (loss) attributable to the Company | $ | 916 | $ | 637 |
Balance Sheet Account - Pelium | March 31, 2016 | December 31, 2015 | ||||||
Cash | $ | 570 | $ | 377 | ||||
Receivables | 2,377 | 2,345 | ||||||
Investment securities, at fair value | 25,610 | 24,712 | ||||||
Other assets | 93 | 98 | ||||||
$ | 28,650 | $ | 27,532 | |||||
Accrued expenses and other liabilities | $ | 766 | $ | 99 |
Receivables from Managed Entities and Related Parties, Net | Investments | Maximum Exposure to Loss in Non-consolidated VIEs | |||||||||
Ischus entities | $ | — | $ | — | $ | — | |||||
Trapeza entities | — | 751 | 751 | ||||||||
$ | — | $ | 751 | $ | 751 |
March 31, 2016 | December 31, 2015 | ||||||
Accounts payable and other accrued liabilities | $ | 7,762 | $ | 7,919 | |||
Supplemental executive retirement plan ("SERP") liability (see Note 14) | 6,297 | 6,454 | |||||
Accrued wages and benefits | 4,283 | 8,036 | |||||
Deferred rent | 2,238 | 2,323 | |||||
Apidos contractual obligation, at fair value (see Notes 7 and 17) | 414 | 615 | |||||
Dividends declared and not yet paid | 1,144 | 1,132 | |||||
Insurance notes | 364 | 705 | |||||
Total accrued expenses and other liabilities | $ | 22,502 | $ | 27,184 |
As of March 31, 2016 | December 31, 2015 | ||||||||||
Maximum Amount of Facility | Borrowings Outstanding | Borrowings Outstanding | |||||||||
Credit facilities: | |||||||||||
TD Bank – secured revolving credit facility (1) | $ | 6,997 | $ | — | $ | — | |||||
Republic Bank – secured revolving credit facility | 1,969 | — | — | ||||||||
— | — | ||||||||||
Other debt: | |||||||||||
Senior Notes | 10,000 | 10,000 | |||||||||
Mortgage debt - hotel property | 9,822 | 9,877 | |||||||||
Other debt | 775 | 870 | |||||||||
Total borrowings outstanding | $ | 20,597 | $ | 20,747 |
(1) | The amount of the TD facility shown has been reduced by $503,000 for an outstanding letter of credit at March 31, 2016. |
2017 | $ | 609 | |
2018 | 10,603 | ||
2019 | 297 | ||
2020 | 276 | ||
2021 | 296 | ||
Thereafter | 8,516 | ||
Total | $ | 20,597 |
Investment Securities Available-for-Sale | Cash Flow Hedges | Foreign Currency Translation Adjustments | SERP Pension Liability | Total | |||||||||||||||
Balance, December 31, 2015, net of tax of $(505), $0, $(4) and $(2,524) | $ | (34 | ) | $ | — | $ | (8 | ) | $ | (3,491 | ) | $ | (3,533 | ) | |||||
Current-period other comprehensive (loss) income | (1,390 | ) | — | — | 70 | (1,320 | ) | ||||||||||||
Balance, March 31, 2016, net of tax of $(1,353), $0, $2 and $(2,473) | $ | (1,424 | ) | $ | — | $ | (8 | ) | $ | (3,421 | ) | $ | (4,853 | ) |
Category | Locations in the consolidated financial statements | |
Investment securities available-for-sale | Revenues - Financial fund management | |
Cash flow hedges | Revenues - Commercial Finance | |
SERP pension liability | General and administrative expenses | |
Foreign currency translation adjustments | Other income |
Three Months Ended March 31, 2016 | |||
Noncontrolling interests, beginning of year | $ | 22,356 | |
Net income (loss) attributable to noncontrolling interests | 366 | ||
Other | 14 | ||
Noncontrolling interests, end of period | $ | 22,736 |
Three Months Ended | |||||
March 31, | |||||
2016 | 2015 | ||||
Shares | |||||
Basic shares outstanding | 20,611 | 22,965 | |||
Dilutive effect of outstanding director units and stock options | 278 | 274 | |||
Diluted shares outstanding | 20,889 | 23,239 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Interest cost | $ | 62 | $ | 62 | |||
Less: expected return on plan assets | (10 | ) | (19 | ) | |||
Plus: amortization of unrecognized loss | 121 | 106 | |||||
Net cost | $ | 173 | $ | 149 |
March 31, 2016 | December 31, 2015 | ||||||
Receivables from managed entities and related parties, net: | |||||||
Real estate investment entities | $ | 14,314 | $ | 21,146 | |||
Commercial finance investment entity | 1,044 | 1,289 | |||||
Financial fund management investment entities | 1,271 | 1,582 | |||||
Other | 167 | 319 | |||||
RSO | 2,888 | 2,331 | |||||
Loan to CVC Credit Partners | 2,743 | — | |||||
Receivables from managed entities and related parties | $ | 22,427 | $ | 26,667 | |||
Payables due to managed entities and related parties, net: | |||||||
Real estate investment entities (1) | $ | 2,776 | $ | 3,110 | |||
Other | 35 | 35 | |||||
Payables to managed entities and related parties | $ | 2,811 | $ | 3,145 |
(1) | Includes $2.7 million and $3.0 million in self-insurance funds provided by the Company's real estate investment entities as of March 31, 2016 and December 31, 2015, respectively, which are held in escrow by the Company to cover claims. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Fees from unconsolidated investment entities: | |||||||
Real estate (1) | $ | 3,156 | $ | 2,187 | |||
Financial fund management | 774 | 782 | |||||
RSO: | |||||||
Management, incentive and servicing fees | 3,745 | 3,232 | |||||
Dividends paid | 300 | 458 | |||||
Reimbursement of costs and expenses | 1,037 | 1,071 | |||||
CVC Credit Partners: reimbursement of net costs and expenses | 219 | 229 | |||||
Opportunity REIT I: | |||||||
Fees | 4,617 | 6,305 | |||||
Reimbursement of costs and expenses | 1,275 | 888 | |||||
Dividends paid | 44 | 15 | |||||
Opportunity REIT II: | |||||||
Fees | 4,790 | 1,012 | |||||
Reimbursement of costs and expenses | 578 | 737 | |||||
Dividends paid | 20 | 7 | |||||
Innovation Office REIT: | |||||||
Reimbursement of costs and expenses | 621 | — | |||||
Resource Apartment REIT III: | |||||||
Reimbursement of costs and expenses | 261 | — | |||||
LEAF: | |||||||
Payment for sub-servicing the commercial finance investment partnerships | (12 | ) | (23 | ) | |||
Reimbursement of net costs and expenses | 36 | 36 | |||||
1845 Walnut Associates Ltd: | |||||||
Payment for rent and related expenses | (214 | ) | (207 | ) | |||
Property management fees | 47 | 38 | |||||
Brandywine Construction & Management, Inc.: payment for property management of hotel property | (52 | ) | (52 | ) | |||
Atlas Energy, L.P.: reimbursement of net costs and expenses | 29 | 13 | |||||
Ledgewood P.C.: payment for legal services | (35 | ) | (34 | ) | |||
Graphic Images, LLC: payment for printing services | (26 | ) | (48 | ) | |||
9 Henmar LLC: payment of broker/consulting fees | (3 | ) | (3 | ) |
(1) | Includes discounts recorded (reversed) of $6,000 and $(207,000) for the three months ended March 31, 2016 and March 31, 2015, respectively, in connection with management fees from the Company's real estate investment entities that it expects to receive in future periods. |
(2) | The Company waived management fees from its commercial finance investment entities of $7,000 during the three months ended March 31, 2016 and $49,000 during the three months ended March 31, 2015. |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
RSO dividends | $ | 300 | $ | 458 | ||||
Interest income | 214 | 104 | ||||||
Other expense, net | (7 | ) | (248 | ) | ||||
Other income, net | $ | 507 | $ | 314 |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets - Investment securities | |||||||||||||||
Investment securities | $ | 9,912 | $ | — | $ | 9,236 | $ | 19,148 | |||||||
Pelium securities | — | — | 25,610 | 25,610 | |||||||||||
March 31, 2016 | $ | 9,912 | $ | — | $ | 34,846 | $ | 44,758 | |||||||
Investment securities | $ | 11,062 | $ | — | $ | 9,898 | $ | 20,960 | |||||||
Pelium securities | — | — | 24,712 | 24,712 | |||||||||||
December 31, 2015 | $ | 11,062 | $ | — | $ | 34,610 | $ | 45,672 |
Liability - Apidos contractual commitment | Level 1 | Level 2 | Level 3 | Total | |||||||||||
March 31, 2016 | $ | — | $ | — | $ | 414 | $ | 414 | |||||||
December 31, 2015 | — | — | 615 | 615 |
Investment Securities | Pelium Securities | Total | |||||||||
Balance, beginning of year | $ | 9,898 | $ | 24,712 | $ | 34,610 | |||||
Purchases | 732 | 4,464 | 5,196 | ||||||||
Income accreted | 297 | — | 297 | ||||||||
Payments and distributions received, net | (467 | ) | (1,398 | ) | (1,865 | ) | |||||
Sales | (666 | ) | (2,912 | ) | (3,578 | ) | |||||
Impairment | (98 | ) | — | (98 | ) | ||||||
Realized gains on CDOs | 498 | — | 498 | ||||||||
Gains on trading securities | — | 460 | 460 | ||||||||
Unrealized holding gains on trading securities | 22 | 284 | 306 | ||||||||
Change in unrealized gains included in accumulated other comprehensive loss | (980 | ) | — | (980 | ) | ||||||
Balance, end of period | $ | 9,236 | $ | 25,610 | $ | 34,846 |
Investment Securities | Pelium Securities | Total | |||||||||
Balance, beginning of year | $ | 8,489 | $ | 17,366 | $ | 25,855 | |||||
Purchases | 2,524 | 27,630 | 30,154 | ||||||||
Income accreted | 1,238 | — | 1,238 | ||||||||
Payments and distributions received, net | (1,913 | ) | (2,874 | ) | (4,787 | ) | |||||
Sales | (174 | ) | (16,012 | ) | (16,186 | ) | |||||
Impairment | (331 | ) | — | (331 | ) | ||||||
Gains (losses) on sales of trading securities | (14 | ) | 1,415 | 1,401 | |||||||
Unrealized holding gains on trading securities | 269 | (2,813 | ) | (2,544 | ) | ||||||
Change in unrealized gains included in accumulated other comprehensive loss | (190 | ) | — | (190 | ) | ||||||
Balance, end of period | $ | 9,898 | $ | 24,712 | $ | 34,610 |
Fair value at March 31, 2016 | Valuation Technique | Unobservable Inputs | Assumptions (weighted average) | ||||||
CLO securities | $ | 7,794 | Discounted cash flow | Constant default rate | 1% - 2% | ||||
Loss severity rate | 25% | ||||||||
Constant prepayment rate | 25% | ||||||||
Reinvestment price on collateral | 99% | ||||||||
Reinvestment spread | 0% - 4.50% | ||||||||
Discount rates | 15% | ||||||||
Trading securities | $ | 1,442 | Net asset value | Value of underlying assets | variable | ||||
Discounted cash flow | Constant default rate | 5% | |||||||
Constant prepayment rate | 30% | ||||||||
Loss severity rate | 30% |
March 31, 2016 | December 31, 2015 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Borrowings: | |||||||||||||||
Real estate debt | $ | 9,822 | $ | 10,689 | $ | 9,877 | $ | 10,618 | |||||||
Senior Notes | 10,000 | 12,553 | 10,000 | 12,202 | |||||||||||
Other debt | 775 | 775 | 870 | 870 | |||||||||||
$ | 20,597 | $ | 24,017 | $ | 20,747 | $ | 23,690 |
Derivatives | Number of Instruments | Notional Amount | Maturity Date | |||||
Foreign currency forward contracts | 2 | $ | 2,676 | August 5, 2016 |
Liability Derivatives | |
March 31, 2016 | |
Balance Sheet | Fair Value |
Foreign currency forward contracts | $64 |
Three Months Ended March 31, 2016 | Real Estate | Financial Fund Management | Commercial Finance | All Other (1) | Total RAI | |||||||||||||||
Revenues from external customers | $ | 17,717 | $ | 5,038 | $ | 80 | $ | — | $ | 22,835 | ||||||||||
Equity in earnings (losses) of unconsolidated entities | 1,446 | 1,691 | (4 | ) | — | 3,133 | ||||||||||||||
Total revenues | 19,163 | 6,729 | 76 | — | 25,968 | |||||||||||||||
Segment operating expenses | (11,018 | ) | (3,680 | ) | (392 | ) | — | (15,090 | ) | |||||||||||
General and administrative expenses | (1,325 | ) | (368 | ) | — | (3,190 | ) | (4,883 | ) | |||||||||||
Provision for credit losses | (4 | ) | — | (105 | ) | — | (109 | ) | ||||||||||||
Depreciation and amortization | (314 | ) | (16 | ) | — | (174 | ) | (504 | ) | |||||||||||
Gain (loss) on sale of investment securities, net | — | 498 | — | — | 498 | |||||||||||||||
Impairment on available for sale securities | — | (98 | ) | — | — | (98 | ) | |||||||||||||
Interest expense | (171 | ) | — | — | (269 | ) | (440 | ) | ||||||||||||
Other income (expense), net | 306 | 296 | 9 | (104 | ) | 507 | ||||||||||||||
Pretax loss (income) attributable to noncontrolling interests (2) | (5 | ) | (361 | ) | — | — | (366 | ) | ||||||||||||
Income (loss) from continuing operations, net of noncontrolling interests before taxes | $ | 6,632 | $ | 3,000 | $ | (412 | ) | $ | (3,737 | ) | $ | 5,483 |
Three Months Ended March 31, 2015 | Real Estate | Financial Fund Management | Commercial Finance | All Other (1) | Total RAI | |||||||||||||||
Revenues from external customers | $ | 16,294 | $ | 4,867 | $ | 13 | $ | — | $ | 21,174 | ||||||||||
Equity in (losses) earnings of unconsolidated entities | 672 | 2,008 | (15 | ) | — | 2,665 | ||||||||||||||
Total revenues | 16,966 | 6,875 | (2 | ) | — | 23,839 | ||||||||||||||
Segment operating expenses | (11,499 | ) | (3,063 | ) | (579 | ) | — | (15,141 | ) | |||||||||||
General and administrative expenses | (879 | ) | (284 | ) | — | (2,134 | ) | (3,297 | ) | |||||||||||
Reversal of (provision for) credit losses | (114 | ) | — | (288 | ) | — | (402 | ) | ||||||||||||
Depreciation and amortization | (312 | ) | (16 | ) | — | (129 | ) | (457 | ) | |||||||||||
Interest expense | (183 | ) | — | — | (238 | ) | (421 | ) | ||||||||||||
Other income, net | 223 | 441 | 1 | (351 | ) | 314 | ||||||||||||||
Pretax loss (income) attributable to noncontrolling interests (2) | 8 | (1,665 | ) | — | — | (1,657 | ) | |||||||||||||
Income (loss) from continuing operations, net of noncontrolling interests before taxes | $ | 4,210 | $ | 2,288 | $ | (868 | ) | $ | (2,852 | ) | $ | 2,778 |
Segment assets | Real Estate | Financial Fund Management | Commercial Finance | All Other (1) | Total RAI | |||||||||||||||
March 31, 2016 | $ | 212,594 | $ | 90,798 | $ | 3,090 | $ | (101,896 | ) | $ | 204,586 | |||||||||
March 31, 2015 | $ | 191,693 | $ | 108,794 | $ | 4,173 | $ | (75,309 | ) | $ | 229,351 |
(1) | Includes general corporate expenses and assets not allocable to any particular segment. |
(2) | In viewing its segment operations, the Company includes the pretax income attributable to noncontrolling interests. However, these interests are excluded from income (loss) from operations as computed in accordance with U.S. GAAP and should be deducted to compute income from operations as reflected in the Company’s consolidated statements of operations. |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
March 31, | Increase (decrease) | ||||||||||||
2016 | 2015 | Amount | Percentage | ||||||||||
Financial fund management (2) | $ | 17,594 | $ | 16,323 | $ | 1,271 | 8% | ||||||
Real estate (3) | 4,004 | 3,567 | 437 | 12% | |||||||||
Commercial finance | 811 | 692 | 119 | 17% | |||||||||
$ | 22,409 | $ | 20,582 | $ | 1,827 | 9% | |||||||
Net assets under management (4) | $ | 9,450 | $ | 9,975 | $ | (525 | ) | (5)% |
(1) | We describe how we calculate assets under management in the notes to the third table of this section. |
(2) | The $1.3 billion net increase in financial fund management assets primarily reflects a $1.8 billion increase in assets managed by CVC Credit Partners offset, in part, by reductions in the eligible collateral bases of our ABS and trust preferred securities portfolios by $(441.0) million and $(103.9) million, respectively, resulting from defaults, paydowns, sales and calls. |
(3) | The $437.0 million net increase in real estate assets primarily reflects a $421.0 million increase in Opportunity REIT II assets in conjunction with the completion of its equity raise and $112.0 million increase in Opportunity REIT I, offset, in part, by a $(267.0) million decrease in the assets managed by our real estate partnerships as some of the earlier funds were liquidated. |
(4) | Net assets under management represents the proportionate share of assets we manage after reflecting joint venture arrangements. |
CDOs and CLOs | Limited Partnerships | TIC Programs | Other Investment Funds | ||||
As of March 31, 2016 (1) | |||||||
Financial fund management | 50 | 14 | — | 15 | |||
Real estate | 6 | 5 | 3 | 5 | |||
Commercial finance | — | 1 | — | 1 | |||
56 | 20 | 3 | 21 | ||||
As of March 31, 2015 (1) | |||||||
Financial fund management | 47 | 12 | — | 11 | |||
Real estate | 5 | 8 | 6 | 5 | |||
Commercial finance | — | 2 | — | 2 | |||
52 | 22 | 6 | 18 |
(1) | All of our operating segments manage assets on behalf of RSO. |
March 31, 2016 | March 31, 2015 | ||||||||||||||||||
Institutional and Individual Investors | RSO | Company | Total | Total | |||||||||||||||
Bank loans (1) | $ | 13,077 | $ | 594 | $ | — | $ | 13,671 | $ | 11,870 | |||||||||
Trust preferred securities (1) | 3,070 | — | — | 3,070 | 3,173 | ||||||||||||||
Asset-backed securities (1) | 406 | — | — | 406 | 847 | ||||||||||||||
Mortgage and other real estate-related loans (2) | 7 | 1,956 | — | 1,963 | 1,894 | ||||||||||||||
Real properties (2) | 1,932 | — | 16 | 1,948 | 1,629 | ||||||||||||||
Commercial finance assets (3) | 811 | — | — | 811 | 692 | ||||||||||||||
Private equity and other assets (1) | 142 | 398 | — | 540 | 477 | ||||||||||||||
$ | 19,445 | $ | 2,948 | $ | 16 | $ | 22,409 | $ | 20,582 | ||||||||||
Net assets under management (4) | $ | 7,036 | $ | 2,398 | $ | 16 | $ | 9,450 | $ | 9,975 |
(1) | We value these assets at their amortized cost. |
(2) | We value our managed real estate assets as the sum of: (i) the amortized cost of the commercial real estate loans; and (ii) the book value of each of the following: (a) real estate and other assets held by our real estate investment entities, (b) our outstanding legacy loan portfolio, and (c) our interests in real estate. |
(3) | We value our commercial finance assets as the sum of the book value of the financed equipment and leases and loans. |
(4) | Net assets under management represents the proportionate share of assets we manage after reflecting joint venture arrangements. |
Total | Real Estate | Financial Fund Management | Corporate/ Other | ||||
March 31, 2016 | |||||||
Investment professionals | 93 | 69 | 19 | 5 | |||
Other | 115 | 41 | 23 | 51 | |||
208 | 110 | 42 | 56 | ||||
Property management | 474 | 474 | — | — | |||
Total | 682 | 584 | 42 | 56 | |||
March 31, 2015 | |||||||
Investment professionals | 89 | 72 | 14 | 3 | |||
Other | 101 | 39 | 13 | 49 | |||
190 | 111 | 27 | 52 | ||||
Property management | 515 | 515 | — | — | |||
Total | 705 | 626 | 27 | 52 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Fund management revenues (1) | $ | 20,751 | $ | 18,100 | |||
Finance and rental revenues (2) | 1,296 | 2,350 | |||||
RSO management fees (3) | 3,882 | 3,368 | |||||
Other revenues | 39 | 21 | |||||
$ | 25,968 | $ | 23,839 |
(1) | Includes fees from our real estate and financial fund management segments and our share of the income or loss from limited and general partnership interests we own in our real estate, financial fund management and commercial finance operations. |
(2) | Includes rental income and revenues from certain real estate assets. |
(3) | Reflects the various management fees that are received by our operating segments acquiring, managing, and financing the assets of RSO. |
• | the acquisition, ownership and management of portfolios of real estate and real estate related debt, which we have acquired through sponsored real estate investment entities as well as through joint ventures with institutional investors, that principally invest in multifamily housing; |
• | the management, principally for RSO, of general investments in commercial real estate debt, including first mortgage debt, whole loans, mortgage participations, B notes, mezzanine debt and related commercial real estate securities; |
• | the development and expansion of our liquid alternative investment product platform for investments that offer higher levels of income, lower volatility and, because they include publicly-traded vehicles, greater liquidity as compared to traditional real estate investments. Our current platform includes the DIF and the CIF; and |
• | to a significantly lesser extent, the management and resolution of a portfolio of real estate property interests that we acquired at various times between 1991 and 1999, which we collectively refer to as our legacy portfolio. |
March 31, | |||||||
2016 | 2015 | ||||||
Assets under management: (1) | |||||||
Commercial real estate debt | $ | 1,807 | $ | 1,682 | |||
Opportunity REIT I | 1,070 | 958 | |||||
Opportunity REIT II | 552 | 131 | |||||
Real estate investment funds and programs | 250 | 517 | |||||
Residential mortgages for RSO | 149 | 205 | |||||
Liquid alternatives | 93 | 38 | |||||
Pearlmark | 64 | — | |||||
Others | 3 | 5 | |||||
Legacy portfolio | 16 | 16 | |||||
Institutional portfolio | — | 15 | |||||
$ | 4,004 | $ | 3,567 | ||||
Net assets under management | $ | 3,972 | $ | 3,564 |
(1) | For information on how we calculate assets under management, see "Assets Under Management” above. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Management fees: | |||||||
Asset management fees | $ | 4,645 | $ | 3,352 | |||
Property management fees | 3,044 | 2,932 | |||||
REIT management fees from RSO | 3,102 | 2,752 | |||||
Broker-dealer fees | 844 | 1,692 | |||||
11,635 | 10,728 | ||||||
Other: | |||||||
Rental property income | 1,207 | 1,193 | |||||
Master lease revenues | — | 1,145 | |||||
Fee income from sponsorship of investment entities | 4,874 | 3,228 | |||||
Equity in gains (losses) of unconsolidated entities | 1,447 | 672 | |||||
$ | 19,163 | $ | 16,966 | ||||
Costs and expenses: | |||||||
General and administrative expenses | $ | 6,186 | $ | 4,964 | |||
Property management expenses | 2,713 | 2,409 | |||||
Broker-dealer expenses | 1,214 | 2,278 | |||||
Master lease expenses | 27 | 968 | |||||
Rental property expenses | 878 | 880 | |||||
$ | 11,018 | $ | 11,499 |
• | a $1.3 million increase in asset management fees, due principally to an increase in fees earned from Opportunity REIT I and Opportunity REIT II in conjunction with the increase in their combined assets; |
• | a $350,000 increase in management fees from RSO, due to a $770,000 prior period adjustment, partially offset by a decrease in the base management fees due to a decrease in the equity capital of RSO upon which the fee is based; |
• | a $112,000 increase in property management fees, also due principally to an increase in fees earned from Opportunity REIT I and Opportunity REIT II in conjunction with the increase in their combined asset base; and |
• | an $848,000 decrease in dealer-manager fees. During the quarter ended March 31, 2016, we raised $42.5 million for Opportunity REIT II as compared to $91.0 million during the quarter ended March 31, 2015. Our broker-dealer subsidiary, Resource Securities, Inc., was the dealer-manager for the offering. |
• | a $1.6 million increase in fee income from sponsored investment entities in connection with the purchase and third-party financing of properties by those entities, as follows: |
• | during the three months ended March 31, 2016, we earned $4.9 million in fees primarily from the following activities: |
• | the acquisition of two properties (valued at $117.3 million); |
• | the sale of two properties (valued at $68.2 million); and |
• | the financing of one property (with $28.8 million face value of debt). |
• | in comparison, during three months ended March 31, 2015, we earned $3.2 million in fees, primarily from the following activities: |
• | the acquisition of three properties (valued at $92.5 million); |
• | the sale of three properties (valued at $68.5 million); and |
• | the financing of two properties (with $39.2 million face value of debt). |
• | a $775,000 increase in equity in earnings of unconsolidated entities; and |
• | a $1.1 million decrease in master lease revenues due to the sale of the underlying property in July 2015. |
• | a $1.1 million decrease in broker-dealer expenses, reflecting the $774,000 decrease in sales commissions associated with the close of fundraising on behalf of Opportunity REIT II during early 2016; |
• | a $941,000 decrease in master lease expenses due to the sale of the underlying property in July 2015; |
• | a $1.2 million increase in general and administrative expenses, primarily reflecting a $607,000 increase in compensation expense (in conjunction with the higher number of employees and related wages as a result of the increase in real estate assets under management and a $540,000 increase in marketing and travel expenses associated with fundraising and acquisition activities; and |
• | a $304,000 increase in property management expenses, primarily wages and benefits associated with increased staffing levels required to manage the higher number of properties under management. |
• | CVC Credit Partners, a joint venture between us and an unrelated third-party, finances, structures and manages investments in bank loans, high yield bonds and equity investments through CLO issuers and managed accounts, and three credit opportunities funds; |
• | Resource Capital Manager, Inc., or RCM, an indirect wholly-owned subsidiary, provides investment management and administrative services to RSO under a management agreement between us, RCM and RSO, which we refer to as the RCM Agreement; |
• | Resource Capital Markets, Inc., or Resource Capital Markets, through our registered broker-dealer subsidiary, Resource Securities, acts as an agent in the primary and secondary markets for structured finance securities and transactions; |
• | Northport Capital, LLC, or Northport, provides middle market loan management and monitoring services to RSO under the RCM agreement; |
• | Trapeza Capital Management, LLC, or TCM, a joint venture between us and an unrelated third-party, manages investments in trust preferred securities and senior debt securities of banks, bank holding companies, insurance companies and other financial companies through CDO issuers. TCM, together with the Trapeza CDO issuers, are collectively referred to as Trapeza; |
• | Ischus Capital Management, LLC, or Ischus, manages the legacy CDOs that it sponsored, which hold investments in ABS including residential mortgage-backed securities, or RMBS, and commercial mortgage-backed securities, or CMBS; |
• | Resource Financial Institutions Group, Inc., or RFIG, serves as the general partner for seven company-sponsored affiliated partnerships which hold investments in financial institutions; and |
• | Pelium Capital Management, LLC serves as the manager for Pelium Capital Partners, LP, , or Pelium, a hedge fund with primary holdings in CDO/CLO note and equity positions, CMBS and warehouse facilities. |
Assets under management (1): | Institutional and Individual Investors | RSO | Total by Type | ||||||||
March 31, 2016 | |||||||||||
CVC Credit Partners | $ | 13,077 | $ | 594 | $ | 13,671 | |||||
Trapeza | 3,070 | — | 3,070 | ||||||||
Ischus | 406 | — | 406 | ||||||||
Other partnerships and funds | 49 | 398 | 447 | ||||||||
$ | 16,602 | $ | 992 | $ | 17,594 | ||||||
Net assets under management | $ | 5,036 | $ | 442 | $ | 5,478 | |||||
March 31, 2015 | |||||||||||
CVC Credit Partners | $ | 10,787 | $ | 1,083 | $ | 11,870 | |||||
Trapeza | 3,173 | — | 3,173 | ||||||||
Ischus | 847 | — | 847 | ||||||||
Other partnerships and funds | 58 | 375 | 433 | ||||||||
$ | 14,865 | $ | 1,458 | $ | 16,323 | ||||||
Net assets under management | $ | 5,898 | $ | 501 | $ | 6,410 |
(1) | For information on how we calculate assets under management and net assets under management, see "Assets Under Management" above. |
• | Introductory agent - connecting buyers and sellers in structured security transactions for which fees vary by transaction; |
• | Auction agent - assisting with the auction process of securities for third-party CDO and CLO managers; |
• | Structuring and placement - assisting with the structuring of assets and placement of debt and equity securities in CLO transactions managed by third-party managers; |
• | Trading portfolio - our Board of Directors approved the allocation of up to $6.5 million of capital to invest for our own account in which we buy and sell structured finance securities. At March 31, 2016, we had an investment of $1.3 million in a proprietary trading portfolio and an investment of $1.4 million in RCM Global, LLC, or RCM Global, a venture between us, RSO and certain related parties that holds a portfolio of available-for-sale securities; and |
• | Pelium Capital Partners, L.P. - managing a portfolio with a net asset value of $27.9 million, principally consisting of credit-related instruments and securities for our own account and for the account of RSO. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Fund management fees | $ | 659 | $ | 742 | |||
Fund management fees - incentive | 2,028 | 781 | |||||
RSO management fees | 780 | 616 | |||||
Structuring and placement fees | 41 | 140 | |||||
Loan origination fees | 1,149 | 884 | |||||
Introductory agent fees | 128 | 118 | |||||
Equity in earnings of unconsolidated CDO issuers | 302 | 288 | |||||
Equity in earnings of CVC Credit Partners | 916 | 637 | |||||
Gains, net, on trading securities | 22 | 5 | |||||
Other revenues | 16 | 14 | |||||
6,041 | 4,225 | ||||||
Limited and general partners' interests: | |||||||
Fair value adjustments | 73 | 334 | |||||
Operations | 89 | 73 | |||||
LLC member interests | 74 | 505 | |||||
236 | 912 | ||||||
RFFM revenues | 6,277 | 5,137 | |||||
Revenues from consolidated VIE - Pelium | 452 | 1,738 | |||||
RFFM revenues - consolidated | $ | 6,729 | $ | 6,875 | |||
Costs and expenses: | |||||||
RFFM general and administrative expenses | $ | 3,590 | $ | 2,990 | |||
General and administrative expenses from consolidated VIE - Pelium | 90 | 73 | |||||
General and administrative expenses - RFFM consolidated | $ | 3,680 | $ | 3,063 |
• | a $1.2 million increase in fund management incentive fees primarily as a result of the call of three legacy Apidos CLOs. In conjunction with the sale of Apidos to CVC Credit Partners, we retained a 75% interest in the incentive fees earned by the legacy Apidos CLOs, which depend on CLO performance. A portion of the incentive fees we received were determined to be a reduction of our preferred interest investment in unconsolidated loan manager; |
• | a $164,000 increase in RSO management fees, primarily due to a prior period adjustment; |
• | a $265,000 increase in loan origination fees earned by Northport in connection with the closing of $57.8 million in middle market loans issued by RSO as compared to $46.9 million for the prior year quarter; and |
• | a $279,000 increase in earnings generated by CVC Credit Partners, including net foreign currency gains of $339,000. |
• | a $676,000 decrease in earnings from our limited and general partner interests and LLC member interests, which include a $415,000 decrease in equity in earnings from our investment in RCM Global and a $223,000 decrease in |
March 31, | |||||||
Assets under management (1): | 2016 | 2015 | |||||
LEAF | $ | 661 | $ | 602 | |||
Managed for others | 149 | 83 | |||||
Others, including commercial finance investment partnerships | 1 | 7 | |||||
$ | 811 | $ | 692 |
(1) | For information on how we calculate assets under management, see “Assets Under Management” above. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Equity in losses of unconsolidated investment entities and LEAF | $ | (4 | ) | $ | (15 | ) | |
Commercial finance revenues | 80 | 13 | |||||
$ | 76 | $ | (2 | ) | |||
Costs and expenses: | |||||||
General and administrative expenses - wage and benefit costs | $ | 59 | $ | 90 | |||
General and administrative expenses - other | 333 | 489 | |||||
$ | 392 | $ | 579 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Commercial finance: | |||||||
Receivables from managed entities | $ | — | $ | 256 | |||
Leases and loans | 105 | 32 | |||||
Real estate: | |||||||
Receivables from managed entities | — | 113 | |||||
Rent receivables | 4 | 1 | |||||
$ | 109 | $ | 402 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Real estate property investments | $ | 143 | $ | 137 | |||
Other operating segments - primarily depreciation on fixed assets | 361 | 320 | |||||
Total depreciation expense | $ | 504 | $ | 457 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Corporate | $ | 269 | $ | 238 | |||
Real estate | 171 | 183 | |||||
$ | 440 | $ | 421 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Real estate - hotel property (1) | $ | (5 | ) | $ | (5 | ) | |
Real estate - Australian joint venture (2) | — | 13 | |||||
Financial fund management - Pelium Capital (3) | (361 | ) | (1,665 | ) | |||
$ | (366 | ) | $ | (1,657 | ) |
(1) | A related party holds a 19.99% interest in our hotel property in Savannah, Georgia. |
(2) | Reflected the 25% interest held by our partner in an Australian joint venture which was dissolved during 2015. |
• | cash on hand of $18.3 million; |
• | $9.0 million of availability under two corporate credit facilities; and |
• | cash generated from operations. |
Payments Due By Period | |||||||||||||||||||
Total | Less than 1 Year | 1 – 3 Years | 3 – 5 Years | After 5 Years | |||||||||||||||
Contractual obligations: | |||||||||||||||||||
Non-recourse to us: | |||||||||||||||||||
Mortgage - hotel property (1) | $ | 9,822 | $ | 229 | $ | 504 | $ | 572 | $ | 8,517 | |||||||||
Recourse to us: | |||||||||||||||||||
Other debt (1) | 10,000 | — | 10,000 | — | — | ||||||||||||||
Capital lease obligations (1) | 775 | 380 | 395 | — | — | ||||||||||||||
10,775 | 380 | 10,395 | — | — | |||||||||||||||
Operating lease obligations | 11,595 | 2,494 | 4,427 | 2,670 | 2,004 | ||||||||||||||
Other long-term liabilities | 6,504 | 817 | 1,544 | 1,392 | 2,751 | ||||||||||||||
Total contractual obligations | $ | 38,696 | $ | 3,920 | $ | 16,870 | $ | 4,634 | $ | 13,272 |
(1) | Not included in the table above are estimated interest payments calculated at rates in effect at March 31, 2016 - less than 1 year: $1.6 million; 1-3 years: $2.4 million; 3-5 years: $1.1 million; and after 5 years: $200,000. |
Amount of Commitment Expiration Per Period | |||||||||||||||||||
Total | Less than 1 Year | 1 – 3 Years | 3 – 5 Years | After 5 Years | |||||||||||||||
Other commercial commitments: | |||||||||||||||||||
Standby letters of credit | $ | 803 | $ | 803 | $ | — | $ | — | $ | — | |||||||||
Total commercial commitments | $ | 803 | $ | 803 | $ | — | $ | — | $ | — |
Balance Sheet Account - Pelium | March 31, 2016 | December 31, 2015 | ||||||
Cash | $ | 570 | $ | 377 | ||||
Receivables | 2,377 | 2,345 | ||||||
Investment securities, at fair value | 25,610 | 24,712 | ||||||
Other assets | 93 | 98 | ||||||
$ | 28,650 | $ | 27,532 | |||||
Accrued expenses and other liabilities | $ | 766 | $ | 99 |
Receivables from Managed Entities and Related Parties, Net | Investments | Maximum Exposure to Loss in Non-consolidated VIEs | |||||||||
Ischus entities | $ | — | $ | — | $ | — | |||||
Trapeza entities | — | 751 | 751 | ||||||||
$ | — | $ | 751 | $ | 751 |
Period | Total Number of Shares Purchased | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (2) | |||||||||||
January 2016 | 561,134 | $ | 6.19 | 561,134 | $ | 7,835,459 | |||||||||
February 2016 | — | $ | — | — | $ | 7,835,459 | |||||||||
March 2016 | — | $ | — | — | $ | 7,835,459 | |||||||||
561,134 | $ | 6.19 |
(1) | The average price per share as reflected above includes broker fees and commissions. |
(2) | On August 18, 2015, our Board of Directors authorized a program to repurchase up to $25.0 million in shares of our common stock. |
Exhibit No. | Description | |
3.1 | Restated Certificate of Incorporation of Resource America. (1) | |
3.2 | Amended and Restated Bylaws of Resource America. (1) | |
4.1 | Form of 9% Senior Note due 2018. (2) | |
10.7(b) | Letter Agreement between Alan Feldman and Resource America, Inc., dated January 20, 2015. (3) | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | Interactive Data Files |
(1) | Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended December 31, 1999 and by this reference incorporated herein. |
(2) | Filed previously as an exhibit to our Current Report on Form 8-K filed on September 2, 2014 and by this reference incorporated herein. |
(3) | Filed previously as an exhibit to our Annual Report on Form 10-K filed on March 13, 2015 and by this reference incorporated herein. |
RESOURCE AMERICA, INC. | ||
(Registrant) | ||
May 9, 2016 | By: | /s/ Thomas C. Elliott |
THOMAS C. ELLIOTT | ||
Senior Vice President and Chief Financial Officer | ||
May 9, 2016 | By: | /s/ Arthur J. Miller |
ARTHUR J. MILLER | ||
Vice President and Chief Accounting Officer |
1) | I have reviewed this report on Form 10-Q for the quarter ended March 31, 2016 of Resource America, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5) | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Jonathan Z. Cohen | ||
Date: | May 9, 2016 | Jonathan Z. Cohen |
Chief Executive Officer |
1) | I have reviewed this report on Form 10-Q for the quarter ended March 31, 2016 of Resource America, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5) | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Thomas C. Elliott | ||
Date: | May 9, 2016 | Thomas C. Elliott |
Senior Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Jonathan Z. Cohen | ||
Date: | May 9, 2016 | Jonathan Z. Cohen |
Chief Executive Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Thomas C. Elliott | ||
Date: | May 9, 2016 | Thomas C. Elliott |
Senior Vice President and Chief Financial Officer |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 28, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | RESOURCE AMERICA, INC. | |
Entity Central Index Key | 0000083402 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 20,840,814 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Par value (in usd per share) | $ 1.00 | $ 1.00 |
Shares authorized (in shares) | 1,000,000 | 1,000,000 |
Shares outstanding (in shares) | 0 | 0 |
Par value (in usd per share) | $ 0.01 | $ 0.01 |
Shares authorized (in shares) | 49,000,000 | 49,000,000 |
Shares issued (in shares) | 35,866,472 | 34,973,987 |
Nonvested restricted stock (in shares) | 1,778,341 | 1,095,238 |
Treasury stock, at cost | 15,029,534 | 14,460,024 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 3,403 | $ 3,191 |
Unrealized gains (losses) on investment securities available-for-sale, net of tax of $(849) and $(498) | (1,390) | (656) |
Less: reclassification for (gains) losses realized, net of tax of $0 and $(172) | 0 | (285) |
Total | (1,390) | (941) |
Minimum pension liability adjustments, net of tax of $0 and $9 | 0 | (9) |
Less: reclassification for (gains) losses realized, net of tax of $51 and $50 | 70 | 56 |
Total | 70 | 47 |
Foreign currency translation adjustments, net of tax of $2 and $2 | 0 | 2 |
Subtotal - other comprehensive income (loss) | (1,320) | (892) |
Comprehensive income (loss) attributable to common shareholders | $ 2,083 | $ 2,299 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Unrealized gains (losses) on investment securities available-for-sale, net of tax of $(849) and $(498) | $ (849) | $ (498) |
Less: reclassification for (gains) losses realized, net of tax of $0 and $(172) | 0 | (172) |
Minimum pension liability adjustments, net of tax of $0 and $9 | 0 | 9 |
Less: reclassification for (gains) losses realized, net of tax of $51 and $50 | 51 | 50 |
Foreign currency translation adjustments, net of tax of $2 and $2 | $ 2 | $ 2 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands |
Total |
Total Stockholders’ Equity |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Noncontrolling Interests |
---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2015 | 20,513,963 | |||||||
Balance, January 1, 2016 at Dec. 31, 2015 | $ 160,119 | $ 137,763 | $ 339 | $ 311,491 | $ (30,676) | $ (139,858) | $ (3,533) | $ 22,356 |
Increase (Decrease) Equity [Roll Forward] | ||||||||
Net income (loss) | 3,403 | 3,037 | 3,037 | 366 | ||||
Treasury shares issued (in shares) | 31,600 | |||||||
Treasury shares issued | 141 | 141 | (161) | 302 | ||||
Stock-based compensation (in shares) | 892,485 | |||||||
Stock-based compensation | 1,111 | 1,111 | $ 9 | 1,102 | 0 | |||
Repurchase of common stock (in shares) | (601,110) | |||||||
Repurchases of common stock | (3,648) | (3,648) | (3,648) | |||||
Dividends declared on common stock | (1,144) | (1,144) | (1,144) | |||||
Other | 14 | 14 | ||||||
Other comprehensive income (loss) | (1,320) | (1,320) | (1,320) | |||||
Balance (in shares) at Mar. 31, 2016 | 20,836,938.000 | |||||||
Balance, March 31, 2016 at Mar. 31, 2016 | $ 158,676 | $ 135,940 | $ 348 | $ 312,432 | $ (28,783) | $ (143,204) | $ (4,853) | $ 22,736 |
NATURE OF OPERATIONS |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NATURE OF OPERATIONS | NOTE 1 - NATURE OF OPERATIONS Resource America, Inc. (the "Company") (NASDAQ: REXI) is a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its real estate, financial fund management, and commercial finance operating segments. As a specialized asset manager, the Company seeks to develop investment funds for outside investors for which the Company provides asset management services, typically under long-term management and operating arrangements either through a contract with, or as the manager or general partner of, the sponsored fund. The Company limits its investment funds to investment areas where it owns existing operating companies or has specific expertise. The consolidated financial statements and the information and tables contained in the notes to the consolidated financial statements are unaudited. However, in the opinion of management, these interim financial statements include all adjustments necessary to fairly present the results of the interim periods presented. The results of operations for the three months ended March 31, 2016 may not necessarily be indicative of the results of operations for the full year ending December 31, 2016. The Company conducts its real estate operations primarily through the following subsidiaries:
The Company conducts its financial fund management operations primarily through the following operating entities:
The Company conducts its commercial finance operations through LEAF Commercial Capital, Inc. (“LEAF”) and LEAF Financial Corporation (“LEAF Financial”). As of March 31, 2016, LEAF Financial sponsored and manages one publicly-held investment partnership consisting of a portfolio of leases and loans for which LEAF acts as the sub-servicer. LEAF Financial liquidated two other commercial finance investment partnerships during 2014 and a third investment partnership in July 2015. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements reflect the Company's accounts and the accounts of the Company's majority-owned and/or controlled subsidiaries. The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 810, as amended by Accounting Standards Update (“ASU”) 2015-2, Amendments to the Consolidation Analysis. The determination of whether or not to consolidate entities under accounting principles generally accepted in the United States (“U.S. GAAP”) requires significant judgment. To make these judgments, management performs an entity-by-entity analysis with consideration of i) whether the Company has a variable interest in the entity, ii) whether the entity is a variable interest entity (“VIE”), and iii) whether the Company is the primary beneficiary of the VIE. When determining whether the Company has a variable interest in entities it evaluates for consolidation, the Company considers interests in the entities and fees it receives to act as a decision maker or service provider to the entity being evaluated. If the Company determines that it does not have a variable interest in an entity, no further consolidation analysis is performed as the Company would not be required to consolidate the entity. Fees received by the Company are not variable interests if (i) the fees are compensation for services provided and are commensurate with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length and (iii) the Company's other economic interests in the VIE held directly and indirectly through its related parties, as well as economic interests held by related parties under common control, where applicable, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits. If fees paid to the Company were determined to be a variable interest, it could result in the Company being the primary beneficiary of and thus consolidating the entity being evaluated. Evaluation of these criteria requires judgment. For those entities in which it has a variable interest, the Company performs an analysis to first determine whether the entity is a VIE. This determination includes considering whether the entity’s equity investment at risk is sufficient, whether the voting rights of an investor are not proportional to its obligation to absorb the income or loss of the entity and substantially all of the entity’s activities either involve or are conducted on behalf of that investor and its related parties, and whether the entity’s at risk equity holders have the characteristics of a controlling financial interest. The Company is the general partner/manager of and has a variable interest in certain limited partnerships and similar entities. One of the factors that the Company considers in evaluating whether these entities are VIEs is whether a simple majority (or lower threshold) of limited partners with equity at risk are able to exercise substantive kick-out rights. Kick-out rights are generally defined as the ability to remove the general partner/manager or to dissolve the entity without cause. Generally, if the limited partners with equity at risk are not able to exercise substantive kick-out rights, the entity is a VIE unless the limited partners have been granted substantive participating rights. The Company is also the manager of and has a variable interest in certain entities other than limited partnerships. One of the factors that the Company considers in evaluating whether these entities are VIEs is whether the investors have power through voting rights or similar rights (such as those of a common shareholder in a corporation); and if not, whether a single equity holder has the unilateral ability to exercise substantive kick-out rights. If investors do not have power through voting rights or similar rights or a single equity holder does not have the unilateral ability to exercise substantive kick-out rights, then the entity is a VIE. These analyses require judgment. A VIE must be consolidated by its primary beneficiary. The primary beneficiary of a VIE is generally defined as the party who has a controlling financial interest in the VIE. The Company would be deemed to have a controlling financial interest in a VIE if it and its related parties under common control as a group, where applicable, have (i) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. For purposes of evaluating (ii) above, fees paid to the Company are excluded if the fees are compensation for services provided commensurate with the level of effort required to be performed and the arrangement includes only customary terms, conditions or amounts present in arrangements for similar services negotiated at arm’s length. This analysis requires judgment. All intercompany transactions and balances have been eliminated in the Company's consolidated financial statements. Use of Estimates Preparation of the Company's consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and costs and expenses during the reporting period. The Company makes estimates of its allowance for credit losses, the valuation allowance against its deferred tax assets, discounts and collectability of management fees, the valuation of stock-based compensation, and in determining whether a decrease in the fair value of an investment is an other-than-temporary impairment. The real estate and financial fund management segments make assumptions in determining the fair value of investments in investment securities. Actual results could differ from these estimates. Financing Receivables - Receivables from Managed Entities The Company performs a review of the collectability of its receivables from managed entities on a quarterly basis, by analyzing future cash flows by managed entity. Management fees are recorded net of a discount to the extent that they are anticipated to be collected in excess of one year. With respect to the receivables from its commercial finance investment partnerships, this takes into consideration several assumptions by management, primarily concerning estimates of future bad debts and recoveries. For receivables from the real estate investment entities, the Company estimates the cash flows through the sale of the underlying properties based on projected net operating income as a multiple of published capitalization rates, as reduced by the underlying mortgage balances and priority distributions due to the investors. Investment Securities The Company’s investment securities available-for-sale, including investments in the CLO and CDO issuers it sponsored, are carried at fair value. The fair value of the CLO and CDO investments is based primarily on internally-generated expected cash flow models that require significant management judgment and estimates due to the lack of market activity and the use of unobservable pricing inputs. Investments in affiliated entities, including its holdings in The Bancorp, Inc. (NASDAQ: TBBK), RSO, Resource Credit Income Fund ("CIF") (NASDAQ: RCIIX), and Resource Real Estate Diversified Income Fund ("DIF") (NASDAQ: RREDX), all of which are affiliated entities, are valued at the closing prices of the respective publicly-traded stocks. The Company sold its investment in Resource Real Estate Global Property Securities ("RREGPS"), a Company-sponsored Australian investment fund, in July 2015. The cumulative net unrealized gains (losses) on these investment securities, net of tax, is reported through accumulated other comprehensive income (loss). Realized gains (and losses) on the sale of investments are determined on the trade date on the basis of specific identification and are included in net operating results. Securities that are held principally for resale in the near term (trading securities) are recorded at fair value with changes in fair value recorded in earnings. Hedging - Foreign Currency Risk and Forward Contracts The Company has an exposure to foreign currency risk with respect to advances made to CVC Credit Partners that are repayable in Euros (see Note 15). To mitigate the foreign currency risk, the Company has entered into foreign currency forward contracts (see Note 18). Forward contracts represent future commitments to deliver a quantity of a currency at a predetermined future date and rate to manage currency risk. Financial derivatives are initially recognized in the balance sheet at fair value and subsequently measured at their fair value on each balance sheet date. The forward contracts are not designated as qualifying cash flow hedges and, accordingly, any changes in fair value of the contracts are recognized in the Company’s consolidated statements of operations. Similarly, any changes in the fair value of the Euro-based loan receivable are recognized in the consolidated statements of operations. Reclassifications Certain reclassifications have been made to the 2015 consolidated financial statements to conform to the 2016 presentation. Recent Accounting Standards Newly-Adopted Accounting Principle The Company’s adoption of the following standards during the three months ended March 31, 2016 did not have a material impact on its consolidated financial position, results of operations or cash flows: In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The update requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The guidance was effective for the Company as of January 1, 2016. In January 2015, the FASB issued ASU No. 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates from GAAP the concept of an extraordinary item. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings per share data applicable to an extraordinary item. However, presentation and disclosure guidance for items that are unusual in nature and occur infrequently will be retained. This guidance was effective for the Company as of January 1, 2016. Accounting Standards Issued But Not Yet Effective In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which will replace most of the existing revenue recognition guidance in GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The ASU will be effective for the Company beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Company is in the process of determining the method of adoption and assessing the impact of this ASU on its consolidated financial statements. In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. This guidance, effective for the Company beginning January 1, 2017, is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-02. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting, which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for the Company January 1, 2017 and interim periods within that reporting period. The adoption of ASU 2016-07 is not expected to have a material effect on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The goal of this update is to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This update becomes effective beginning January 1, 2017, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-09. |
SUPPLEMENTAL CASH FLOW INFORMATION |
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SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION Supplemental disclosure of cash flow information for the Company is as follows (in thousands, except per share data):
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FINANCING RECEIVABLES |
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FINANCING RECEIVABLES | NOTE 4 - FINANCING RECEIVABLES The following table is the aging of the Company’s financing receivables (presented gross of allowance for credit losses) as of March 31, 2016 (in thousands):
The following table is the aging of the Company’s financing receivables (presented gross of allowance for credit losses) as of December 31, 2015 (in thousands):
The following table summarizes the activity in the allowance for credit losses for all financing receivables (in thousands):
The Company’s financing receivables (presented exclusive of any allowance for credit losses) relate to the balance in the allowance for credit losses, as follows (in thousands):
The following table discloses information about the Company’s impaired financing receivables (in thousands):
The Company had no impaired financing receivables without a specific allowance as of March 31, 2016 and December 31, 2015. Included in Other Assets in the consolidated balance sheet as of March 31, 2016 and December 31, 2015 is a commercial lease portfolio totaling $687,000 and $1.1 million, respectively, which includes the leases acquired from two of the LEAF investment partnerships upon their liquidation in settlement of balances owed to the Company. As of March 31, 2016, the portfolio was comprised of 41 leases with an average lease balance of $16,800 and a remaining average lease term of 21 months; the aging of the outstanding lease payments was 92% current and 8% was past due 60 days. As of December 31, 2015, the portfolio was comprised of 60 leases with an average lease balance of $18,100 and a remaining average lease term of 15 months; the aging of the outstanding lease payments was 80% current, 5% was past due 30 days, and 15% was past due 90 days and over. |
INVESTMENTS IN REAL ESTATE |
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INVESTMENTS IN REAL ESTATE | NOTE 5 - INVESTMENTS IN REAL ESTATE The Company’s investments in real estate, net, consist of the following (in thousands):
The Company recorded rental income of $1.2 million for each of the three month periods ended March 31, 2016 and March 31, 2015. The contractual future minimum rental income on non-cancelable operating leases included in properties owned for each of the five succeeding annual periods ending March 31, and thereafter, are as follows (in thousands):
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INVESTMENT SECURITIES |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | NOTE 6 - INVESTMENT SECURITIES Components of investment securities are as follows (in thousands):
Available-for-sale securities. The following table discloses the pre-tax unrealized gains (losses) relating to the Company’s investments in available-for-sale securities (in thousands):
CLO securities. The CLO securities represent the Company’s retained equity interests in 14 and 15 CLO issuers that CVC Credit Partners has sponsored and manages at March 31, 2016 and December 31, 2015, respectively (see Note 7). The fair value of these retained interests is impacted by the fair value of the investments held by the respective CLO issuers, which are sensitive to interest rate fluctuations and credit quality determinations. For the three months ended March 31, 2016, the Company adjusted its assumptions with respect to the fair value calculations of its CLO securities based on a change in market conditions, principally to increase the discount rate to 15%, which resulted in an impairment charge of $98,000. In 2015, the Company adjusted its assumptions by increasing the constant default rate in year one and two and decreasing the prepayment speed in year one which resulted in an impairment charge of $331,000. Equity securities. The Company holds 715,396 shares of RSO common stock and 18,972 shares of TBBK common stock. This investment is pledged as collateral for one of the Company’s secured corporate credit facilities. The Company also holds approximately 10,808 shares of DIF with a fair value of $104,000. The Company has an investment of $1.7 million in the CIF, an interval fund, whose registration statement with respect to the offer and sale of its shares of beneficial interest was declared effective by the SEC on April 17, 2015. Trading securities. The Company had net gains on trading securities of $22,000 and $5,000, which included unrealized gains of $22,000 and $20,000 for the three months ended March 31, 2016 and 2015, respectively. These gains are reflected in Financial Fund Management Revenues on the consolidated statements of operations. Pelium, a consolidated VIE which holds securities with a fair value of $25.6 million at March 31, 2016, recorded realized gains of $405,000 and unrealized losses of $326,000 during the three months ended March 31, 2016 and realized gains of $683,000 and unrealized gains of $474,000 during the three months ended March 31, 2015. Unrealized losses on available-for-sale securities, along with their related fair value, and aggregated by the length of time the investments were in a continuous unrealized loss position, are as follows (in thousands, except number of securities):
The unrealized losses in RSO common stock reflected in the above table are considered to be temporary impairments due to market factors and not reflective of credit deterioration. Further, because of its intent and ability to hold its investment in RSO, the Company does not consider the unrealized losses to be other-than-temporary impairments. Unrealized losses related to Pelium fund investments, along with the related fair value and aggregated by the length of time the investments were in a continuous unrealized loss position, are as follows (in thousands, except number of securities):
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INVESTMENTS IN UNCONSOLIDATED ENTITIES AND LOAN MANAGER |
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Investments in Unconsolidated Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES AND LOAN MANAGER | NOTE 7 - INVESTMENTS IN UNCONSOLIDATED ENTITIES AND LOAN MANAGER As a specialized asset manager, the Company develops various types of investment vehicles, which it manages under long-term management agreements or similar arrangements. The following table details the Company’s investments in these vehicles, including the range of ownership interests owned (in thousands, except percentages):
During the three months ended March 31, 2016, the Company invested $2.0 million in the Innovation Office REIT and $1.5 million in Pearlmark. The investment balances reflected in the above table include the Company's equity in the earnings (losses) of the entities, as reduced by any distributions received. Included in real estate investment entities is the Company's $2.5 million investment in Opportunity REIT I, which completed its initial public offering in December 2013, a $1.3 million investment in Opportunity REIT II, which completed its offering in February 2016, a $2.2 million investment in Innovation Office REIT and a $200,000 investment in Resource Apartment REIT III, Inc. ("Apartment REIT III"). The Company accounts for its investments in the Opportunity REITs, Innovation Office REIT and Apartment REIT III on the cost method. As of March 31, 2016, the Company had an investment in Pearlmark of $6.2 million, inclusive of an initial $378,000 general partner contribution to a newly-formed Pearlmark-sponsored fund (see Note 19). The Company accounts for its investment in Pearlmark on the equity method of accounting. The Company has commitments with respect to some of these investments (see Note 19). Included in financial fund management partnerships is the Company's $3.4 million of investments in several managed credit funds, $2.5 million of investments in the RFIG partnerships which hold investments in financial institutions and an $816,000 investment in RCM Global, LLC ("RCM Global"), a venture between the Company, RSO and certain related parties that holds a portfolio of available-for-sale securities. The Company evaluates all of these investments for impairment on a quarterly basis. There were no identified events that had significant adverse effect on these investments and, as such, no impairment was recorded. Investment in Unconsolidated Loan Manager - CVC Credit Partners. In April 2012, the Company sold its equity interests in Apidos Capital Management, LLC ("Apidos") to CVC Capital Partners SICAV-FIS, S.A., a private equity firm (“CVC”), in exchange for (i) $25.0 million in cash, (ii) a 33% limited partner interest in CVC Credit Partners, a Cayman Islands limited partnership jointly owned by the Company and CVC, and (iii) a 33% interest in CVC Credit Partners' general partner, a Jersey corporation. The Company also retained a preferred equity interest in Apidos, which entitles it to receive distributions from CVC Credit Partners equal to 75% of the incentive management fees from the legacy Apidos portfolios. These investments are reflected as Investments in Unconsolidated Loan Manager on the consolidated balance sheets and the Company records its equity share of the operating results of CVC Credit Partners in Financial fund management revenues. In accordance with the CVC Credit Partners shareholders' agreement, in July 2015, CVC exercised its option to purchase a portion of the Company's interest in the joint venture by 9%, which reduced the Company's LP interest to 24%. In conjunction with the buydown, the Company recorded an impairment charge of $4.3 million on its investment in CVC Credit Partners during the three months ended June 30, 2015. The purchase price, an agreed upon formulaic option price based on finalized 2014 results of the joint venture, was not indicative of its fair value. The remaining interests held by the Company were valued by a third-party valuation firm, which concluded that the fair value exceeded the book value and, as such, there was no further impairment. Summarized operating data for CVC Credit Partners is presented below (in thousands):
The Company accounts for its preferred interest in Apidos on the cost method. As incentive fees are received, in accordance with its preferred interest, the Company receives a distribution of 75% of those amounts which will initially be recorded as income, net of any contractual amounts due to third-parties. Each quarter the Company evaluates the book value of the investment by estimating the fair value of the expected future cash flows from the incentive management fees. To the extent that the estimated fair value of future cash flows is less than the cost basis of the investment, such shortfall will be recorded as a reduction of the preferred interest. During the quarter ended March 31, 2016, as a result of cash payouts from three of the legacy Apidos deals that were called during the quarter, the Company's preferred interest was reduced by $2.0 million to $4.8 million. At such time that the investment has been reduced to zero, all subsequent distributions will be recorded as income. The Company evaluates all of these investments for impairment on a quarterly basis. |
VARIABLE INTEREST ENTITIES |
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Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | NOTE 8 - VARIABLE INTEREST ENTITIES In general, a VIE is an entity that does not have sufficient equity to finance its operations without additional subordinated financial support, or an entity for which the risks and rewards of ownership are not directly linked to voting interests. The Company has variable interests in VIEs through its management contracts and investments in various securitization entities, including CDO issuers. The Company serves as the asset manager for the investment entities it sponsored and manages. The management fees the Company earns are excluded from its VIE determination as long as the fees are commensurate with the level of effort provided, are market based and similar to what a third party would charge for similar services, and the Company's other interests in the VIE are not significant. If the entity is deemed to be a VIE, the Company must then evaluate whether it is the primary beneficiary of the entity. Trading Portfolio From time to time, the Company may have an interest in a VIE through the investments it makes as part of its trading activities. Because of the high volume of trading activity the Company experiences, the Company does not perform a formal assessment of each individual investment within its trading portfolio to determine if the investee is a VIE and if the Company is a primary beneficiary. Even if the Company were to obtain a variable interest in a VIE through its trading portfolio, the Company would not typically be deemed to be the primary beneficiary as it does not usually obtain the power to direct activities that most significantly impact the investee’s financial performance. In the extremely unlikely case that the Company somehow obtained the power to direct and a significant variable interest in an investee in its trading portfolio that was a VIE, any such control would be temporary due to the rapid turnover within the trading portfolio. Consolidated VIE - Pelium Pelium is a VIE that the Company manages and in which it has invested $5.0 million for a 20% limited partner interest. Based on its evaluation, the Company concluded that it is the primary beneficiary and, as such, consolidates Pelium. However, the assets of Pelium are held solely to satisfy Pelium's obligations and the creditors of Pelium have no recourse against the assets of the Company. The following are the carrying amounts of the assets and liabilities of Pelium that are reflected in the Company's consolidated balance sheets (in thousands):
VIEs not consolidated The Company has a retained preferred equity interest in the legacy Apidos-CVC CLOs. In addition, the Company has investments in and manages the structured finance entities that hold investments in asset-backed securities (“Ischus entities”) and trust preferred assets (“Trapeza entities”). All of these entities were determined to be VIEs that the Company does not consolidate as it does not have the obligation of, or right to, losses or earnings that would be significant to those entities. The Company has not provided financial or other support to these VIEs and has no liabilities, contingent liabilities, or guarantees (implicit or explicit) related to these VIEs at March 31, 2016. The following table presents the carrying amounts of the assets in the consolidated balance sheets that relate to the Company's variable interests in identified nonconsolidated VIEs that it manages as well as the Company's maximum potential exposure to losses associated with these managed VIEs in which it holds variable interests at March 31, 2016 (in thousands):
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ACCRUED EXPENSES AND OTHER LIABILITIES |
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ACCRUED EXPENSES AND OTHER LIABILITIES | NOTE 9 - ACCRUED EXPENSES AND OTHER LIABILITIES The following is a summary of the components of accrued expenses and other liabilities (in thousands):
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BORROWINGS |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BORROWINGS | NOTE 10 - BORROWINGS The credit facilities and other debt of the Company and related borrowings outstanding are as follows (in thousands):
Corporate and Real Estate Debt TD Bank, N.A. (“TD Bank”). In March 2011, the Company entered into a line of credit loan agreement with TD Bank that, through April 24, 2014, allowed for borrowings up to $7.5 million with interest at either (a) the prime rate plus 2.25% or (b) a specified London Interbank Offered Rate ("LIBOR") plus 3%. The interest rate used varies from one to six month LIBOR depending upon the period of the borrowing. In April 2014, the Company amended the TD Bank facility to (i) extend the maturity date to the earlier of (a) the expiration of the Company's management agreement with RSO or (b) December 31, 2017, (ii) increase the maximum borrowing amount to $11.5 million provided that the Company maintains an aggregate value of pledged securities of $6.0 million and (iii) require that the Company have no cash advances outstanding for thirty consecutive days during each one-year period beginning on April 25, 2014. In January 2016, due to a market decline in the value of the pledged securities, availability under the line of credit was reduced to $7.5 million. The Company is charged an annual fee of 0.5% on the unused facility amount as well as a 5.25% fee on a $503,000 outstanding letter of credit. Borrowings are secured by a first priority security interest in certain of the Company's assets and the guarantees of certain subsidiaries, including (i) the present and future fees and investment income earned in connection with the management of, and investments in, sponsored CDOs and CLOs, (ii) a pledge of 18,972 shares of TBBK common stock, and (iii) a pledge of 540,168 shares of RSO common stock held by the Company. There were no borrowings outstanding on the TD facility as of March 31, 2016 and December 31, 2015. Republic First Bank (“Republic Bank”). In February 2011, the Company entered into a $3.5 million revolving credit facility with Republic Bank. The facility bears interest at the prime rate of interest plus 1% with a floor of 4.5%. The loan is secured by a pledge of 175,000 shares of RSO common stock held by the Company and a first priority security interest in an office building located in Philadelphia, Pennsylvania (see Note 5). Availability under this facility is limited to the lesser of (a) the sum of (i) 25% of the appraised value of the real estate, based upon the most recent appraisal delivered to the bank and (ii) 100% of the cash and 75% of the market value of the pledged RSO shares held in the pledged account; and (b) 100% of the cash and 100% of the market value of the pledged RSO shares held in the pledged account. The loan has an unused annual facility fee equal to 0.25%. In November 2013, the Company further amended this facility to extend the maturity date to December 28, 2016 and increase the unused annual facility fee to 0.5%. There were no borrowings under this facility as of March 31, 2016 and December 31, 2015 and the availability was $2.0 million and $2.2 million, respectively. Senior Notes The Company's $10.0 million of 9% senior notes (the "Senior Notes") mature on March 31, 2018. The effective interest rate for the three months ended March 31, 2016 and March 31, 2015 was 9.1% and 9.1%, respectively. The Company may early redeem all or part of the Senior Notes upon notification to the note holders at the redemption price plus any accrued and unpaid interest through to the date of such redemption. The redemption price prior to March 31, 2017 is at a 101% premium to par. Other Debt - Real Estate and Corporate Real estate - mortgage. The Company has a mortgage on its hotel property in Savannah, Georgia. The 6.36% fixed rate mortgage matures in September 2021 and requires monthly payments of principal and interest of $71,331. The principal balance outstanding as of March 31, 2016 and December 31, 2015 was $9.8 million and $9.9 million, respectively. Corporate and real estate - capital leases. As of March 31, 2016, the Company has various capital leases for computer equipment. Debt Repayments Annual principal payments coming due on the Company’s aggregate borrowings for the five succeeding annual periods ending March 31, and thereafter, are as follows (in thousands):
Covenants The TD Bank credit facility is subject to certain financial covenants, which are customary for the type and size of the facility, including debt service coverage and debt to equity ratios. The debt to equity ratio restricts the amount of recourse debt the Company can incur based on a ratio of recourse debt to net worth. The covenant for the mortgage on the Company's hotel property requires maintaining a minimum debt coverage ratio. In addition, although non-recourse in nature, the loan is subject to limited standard exceptions (or "carveouts") which the Company has guaranteed. These carveouts will expire as the loan is paid down over the next five years. The Company has control over the operations of the underlying property, which mitigates the potential risk associated with these carveouts and, accordingly, no liabilities for these obligations have been recorded in the consolidated financial statements. To date, the Company has not been required to make any carveout payments. The Company was in compliance with all of its financial debt covenants as of March 31, 2016. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 11 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) includes net income (loss) and all other changes in the equity of a business from transactions and other events and circumstances from non-owner sources. These changes, other than net income (loss), are referred to as “other comprehensive income (loss)” and for the Company include primarily changes in the fair value, net of tax, of its investment securities available-for-sale and pension liability. The following are changes in accumulated other comprehensive (loss) income by category (in thousands):
Amounts reclassified from accumulated other comprehensive income were reflected in the consolidated financial statements, as follows:
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NONCONTROLLING INTERESTS |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||
NONCONTROLLING INTERESTS | NOTE 12 - NONCONTROLLING INTERESTS Noncontrolling interests reflect the interests held by RSO in Pelium and, to a lesser extent, the interest held by a related party in the Company's hotel property in Georgia. The following table presents the activity in noncontrolling interests (in thousands):
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | NOTE 13 - EARNINGS PER SHARE Basic earnings per share (“Basic EPS”) is computed using the weighted average number of common shares outstanding during the period, inclusive of nonvested share-based awards that are entitled to receive non-forfeitable dividends. The diluted earnings per share (“Diluted EPS”) computation takes into account the effect of potential dilutive common shares. Potential dilutive common shares, consisting primarily of outstanding stock options, warrants and director deferred shares, are calculated using the treasury stock method. The following table presents a reconciliation of the shares used in the computation of Basic EPS and Diluted EPS (in thousands):
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BENEFIT PLANS |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BENEFIT PLANS | NOTE 14 - BENEFIT PLANS SERP. The Company established a SERP, which has Rabbi and Secular Trust components, for Mr. Edward E. Cohen (“Mr. E. Cohen”), while he was the Company’s Chief Executive Officer. The plan pays Mr. E. Cohen an annual benefit of $838,000 during his lifetime. The components of net periodic benefit costs for the SERP were as follows (in thousands):
Restricted stock. The value of the restricted stock awarded is based on the closing price of the Company's common stock as of the date of grant. During the three months ended March 31, 2016 and 2015, the Company awarded 847,177 and 440,852 shares of restricted stock valued at $4.0 million and $3.9 million, respectively. Additionally, for the three months ended March 31, 2016 and 2015, there were 45,308 and 45,306 shares earned as part of a performance-based award valued at $411,000 and $420,000, respectively. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | NOTE 15 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In the ordinary course of its business operations, the Company has sponsored and manages investment entities. Additionally, it has ongoing relationships with several related entities. The following table details these receivables and payables (in thousands):
The Company receives fees, dividends and reimbursed expenses from several related/managed entities. In addition, the Company reimburses related entities for certain operating expenses. The following table details those activities (in thousands):
Relationship with RSO. Since March 2005, the Company has had a management agreement with RSO pursuant to which it provides certain services, including investment management and certain administrative services, to RSO. The agreement, which had an original maturity date of March 31, 2009, continues to renew automatically for one-year terms unless at least two-thirds of the independent directors or a majority of the outstanding common shareholders agree to not renew it. The Company receives a base management fee, incentive compensation, property management fees and reimbursement for out-of-pocket expenses. The base management fee is equal to 1/12th of the amount of RSO’s equity, as defined by the management agreement, multiplied by 1.50%. In October 2009, February 2010 and March 2012, the management agreement was further amended such that RSO will directly reimburse the Company for the wages and benefits of RSO's chief financial officer, an executive officer who devotes all of his time to serve as RSO’s chairman of the board, and a sufficient number of accounting professionals, each of whom will be exclusively dedicated to RSO's operations (number and amounts charged are reviewed and approved by RSO's Board of Directors), and a director of investor relations who will be 50% dedicated to RSO's operations. In August 2010, the agreement was further amended to reduce the incentive management fee earned by the Company for any fees paid directly by RSO to employees, agents and/or affiliates of the Company with respect to profits earned by a taxable REIT subsidiary of RSO. Relationship with Opportunity REIT I. As of March 31, 2016 and December 31, 2015, the Company had a receivable of $539,000 and $277,000, respectively, for reimbursement of operating costs and expenses. Relationship with Opportunity REIT II. As of March 31, 2016 and December 31, 2015, the Company had a receivable of $580,000 and $4.9 million, respectively from Opportunity REIT II for offering costs and operating expense reimbursements. Relationship with Innovation Office REIT. As of March 31, 2016 and December 31, 2015 the Company had a receivable of $3.0 million and $2.4 million from the Innovation Office REIT for reimbursement of offering costs and expenses. Relationship with Resource Apartment REIT III. As of March 31, 2016 and December 31, 2015 the Company had a receivable of $1.0 million and $739,000, respectively from the Resource Apartment REIT III for reimbursement of offering costs and expenses. Relationship with CVC Credit Partners. On January 13, 2016, the Company entered into a new loan agreement with CVC Credit Partners which provides for borrowings of up to €3.6 million with interest accruing at Euro Interbank Offered Rate ("EURIBOR") plus 7%. In February 2016 and March 2016, CVC Credit Partners borrowed a total of €2.4 million under this new loan. The Company has consulted with hedging and derivative professionals and has utilized hedging instruments in order to minimize FX exposure. In February 2014, the Company loaned a non-executive employee $300,000 under a promissory note bearing interest at 3-month LIBOR plus 3%, resetting annually. In December 2014, the Company amended the terms of the note to provide for an initial repayment of $50,000 plus accrued interest, which was paid on March 15, 2015, with the remaining principal and interest due in full on March 15, 2016. The loan was repaid in full on March 8, 2016. |
OTHER INCOME |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INCOME | NOTE 16 - OTHER INCOME The following table details other income, net (in thousands):
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FAIR VALUE |
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FAIR VALUE | In analyzing the fair value of its assets and liabilities accounted for on a fair value basis, the Company follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities are categorized into one of three levels based on the assumptions (inputs) used in valuing the asset or liability. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows: Level 1 − Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 − Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3 − Unobservable inputs that reflect the entity's own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and that are, consequently, not based on market activity, but upon particular valuation techniques. There were no transfers between any of the levels within the fair value hierarchy for any of the periods presented. The following is a discussion of the assets and liabilities that are recorded at fair value on a recurring and non-recurring basis, as well as the valuation techniques applied to each fair value measurement and the estimates and assumptions used by the Company in those measurements. Investment securities. The Company uses quoted market prices to value its investments in RSO, DIF, CIF and TBBK common stock (Level 1). The fair value of the Company's investments in CLO and CDO securities are based on internally-generated expected cash flow models that require significant management judgments and estimates due to the lack of market activity and unobservable pricing inputs. The significant unobservable inputs used in the fair value measurement include the constant prepayment rate ("CPR"), a probability of default ("CDR"), severity rate, reinvestment price on underlying collateral and the discount rate. Significant increases (decreases) in the default or discount rates in isolation would result in a significantly lower (higher) fair value measurement, whereas significant increases (decreases) in the recovery rate, prepayment rate or reinvestment price in isolation would result in a significantly higher (lower) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the discount rate and a directionally opposite change in the assumption used for prepayment rates, recovery rates and reinvestment prices on underlying collateral. As of March 31, 2016, the Company held six securities of value within its trading portfolio, five of which were debt/equity investments in externally managed CDO issuers and one was a term loan (Level 3). Investment in Apidos-CVC preferred stock and contractual commitment. The Company's estimated contractual commitment associated with its investment in the Apidos-CVC preferred stock was valued at $414,000 at March 31, 2016 based on the present value of the underlying discounted projected cash flows of the legacy Apidos incentive management fees (Level 3). The fair value of the Company’s assets and liability recorded at fair value on a recurring basis were as follows (in thousands):
The following table presents additional information about assets which were measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value during three months ended March 31, 2016 (in thousands):
The following table presents additional information about assets which were measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value during year ended December 31, 2015 (in thousands):
The following table presents the Company's quantitative inputs and assumptions used in determining the fair value of items categorized in Level 3 (in thousands, except percentages):
In accordance with guidance on fair value measurements and disclosures, the Company is not required to disclose quantitative information with respect to unobservable inputs contained in fair value measurements that are not developed by the Company. As a consequence, the Company has not disclosed such information associated with fair values obtained from third-party pricing sources. The fair value of financial instruments required to be disclosed at fair value, excluding instruments valued on a recurring basis, is as follows (in thousands):
For cash, receivables and payables, the carrying amounts approximate fair value because of the short-term maturity of these instruments. The Company estimated the fair value of the real estate debt using current interest rates for similar loans. The Company estimated the fair value of the Senior Notes by applying the percentage appreciation in a high-yield fund with approximately similar quality and risk attributes as the Senior Notes. The carrying value of the Company's other debt was estimated using current interest rates for similar loans at March 31, 2016 and December 31, 2015. |
DERIVATIVES |
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DERIVATIVES | NOTE 18 - DERIVATIVES As of March 31, 2016, the Company had the following outstanding foreign currency forward contracts outstanding (in thousands):
The table below presents the fair value of the Company's derivative financial instruments, which are included in accrued expenses and other liabilities on the consolidated balance sheets (in thousands):
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COMMITMENTS AND CONTINGENCIES |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 19 - COMMITMENTS AND CONTINGENCIES As of March 31, 2016, except for executive compensation, the Company did not believe it was probable that any payments would be required under any of its contingencies and, accordingly, no liabilities were recorded in the consolidated financial statements. The Company's commitments and contingencies as of March 31, 2016 were as follows: Corporate Broker-dealer capital requirement. Resource Securities serves as a dealer-manager for the sale of securities of direct participation investment programs, both public and private, sponsored by subsidiaries of the Company who also serve as general partners and/or managers of these programs. Additionally, Resource Securities serves as an introducing agent for transactions involving sales of securities of financial services companies, REITs and insurance companies for the Company and for RSO. As a broker-dealer, Resource Securities is required to maintain minimum net capital, as defined in regulations under the Securities Exchange Act of 1934, as amended, which was $100,000 and $259,000 as of March 31, 2016 and December 31, 2015, respectively. As of March 31, 2016 and December 31, 2015, Resource Securities net capital was $1.0 million and $1.0 million, respectively, which exceeded the minimum requirements by $902,000 and $780,000, respectively. Legal proceedings. The Company is also a party to various routine legal proceedings arising out of the ordinary course of business. Management believes that none of these actions, individually or, in the aggregate, will have a material adverse effect on the Company's consolidated financial condition or operations. Executive compensation. The Company is also party to employment agreements with certain executives that provide for compensation and other benefits, including severance payments under specified circumstances. Financial fund management Clawback liability. One of the Company's structured finance partnerships that invests in public and private regional banks has a potential clawback of up to 75% of the management fees paid to the Company ($1.3 million as of March 31, 2016) to the extent that the limited partners’ aggregate capital contributions exceed the total partner distributions from the fund. As of March 31, 2016, the fair value of the fund's assets were sufficient to cover the distribution requirement and, as such, no liability has been recorded for this contingency. Capital commitments. The Company is committed to fund the following investments: In connection with the Company's investment in CVC Credit Partners, in its capacity as the fund manager for some of its managed accounts/funds, the Company is contractually committed to invest capital along with third-party investors. Accordingly, as of March 31, 2016, the Company’s pro-rata portion of the unfunded capital commitments totaled $5.3 million across five such funds/accounts. The Company expects these unfunded commitments to be called over the next two years. On April 11, 2016, the Company signed an agreement to create a new joint venture, RRA CP LLC, along with two other members, to manage pools of residential real estate first and second lien loans and lines of credit, and other residential mortgage assets and residential real estate properties. The Company will have a 5% interest and will serve as the managing member of the joint venture. The joint venture’s planned initial investment is for approximately $25.0 million, of which the Company will be committed to fund approximately $1.2 million. This commitment is payable upon the execution of the final purchase and sale agreement which is planned to occur in May 2016. Real estate REIT capital commitments. As a specialized asset manager, the Company sponsors and manages investment funds in which it may make an equity investment along with outside investors. This equity investment is generally based on a percentage of funds raised and varies among investment programs. With respect to Apartment REIT III, in addition to the $200,000 initial capital investment, the Company is committed to invest up to 1% of the first $100.0 million of equity raised to a maximum of $1.0 million. The liability for these commitments will be recorded in the future as the amounts become due and payable. Pearlmark joint venture capital commitment. In connection with the Pearlmark joint venture, the Company is committed to fund up to $8.0 million, of which $7.0 million had been funded as of March 31, 2016. This funding is reflected as the Company's investment in Pearlmark and will have a preference in distributions, plus a 10% internal rate of return, from the joint venture before any monies will be distributed to the other investors. In April 2016, the Company provided an additional $1.0 million to Pearlmark which completed its funding commitment. In connection with the formation of Pearlmark's first fund offering, Pearlmark Mezzanine Realty Partners IV, L.P., the Company is committed to contribute up to a maximum of $1.7 million as a General Partner of the fund. As of March 31, 2016, the Company has funded $378,000 of that commitment. Commercial finance Commercial finance partnership guarantee. In connection with the sale of a portfolio of leases and notes by one of the Company's commercial finance partnerships, the Company provided a guarantee whereby the Company will reimburse the buyer in the event that one of the leases in the portfolio fails to make a $183,000 balloon payment on the due date. As of March 31, 2016, the lease is current and there is no indication that the payment will not be made timely; accordingly, no liability has been recorded for this contingency. |
OPERATING SEGMENTS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING SEGMENTS | NOTE 20 - OPERATING SEGMENTS The Company manages its operations and makes business decisions based on three reportable operating segments, Real Estate, Financial Fund Management and Commercial Finance. Certain other activities are reported in the “All Other” category in the tables in order for the information presented about the Company's operating segments to agree to the consolidated balance sheets and statements of operations. Summarized operating segment data are as follows (in thousands):
Major Customer. During the three months ended March 31, 2016 and 2015, the management, incentive, servicing and acquisition fees that the Company received from RSO were 14.4% and 13.6%, respectively, of its consolidated revenues. These fees have been allocated among, and reported as revenues by, the Company's operating segments. |
SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 21 - SUBSEQUENT EVENTS The Company has evaluated subsequent events through the filing of its Quarterly Report on Form 10-Q for the period ended March 31, 2016 and determined that there have not been any events that have occurred that would require adjustments to or disclosures in the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements reflect the Company's accounts and the accounts of the Company's majority-owned and/or controlled subsidiaries. The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 810, as amended by Accounting Standards Update (“ASU”) 2015-2, Amendments to the Consolidation Analysis. The determination of whether or not to consolidate entities under accounting principles generally accepted in the United States (“U.S. GAAP”) requires significant judgment. To make these judgments, management performs an entity-by-entity analysis with consideration of i) whether the Company has a variable interest in the entity, ii) whether the entity is a variable interest entity (“VIE”), and iii) whether the Company is the primary beneficiary of the VIE. When determining whether the Company has a variable interest in entities it evaluates for consolidation, the Company considers interests in the entities and fees it receives to act as a decision maker or service provider to the entity being evaluated. If the Company determines that it does not have a variable interest in an entity, no further consolidation analysis is performed as the Company would not be required to consolidate the entity. Fees received by the Company are not variable interests if (i) the fees are compensation for services provided and are commensurate with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length and (iii) the Company's other economic interests in the VIE held directly and indirectly through its related parties, as well as economic interests held by related parties under common control, where applicable, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits. If fees paid to the Company were determined to be a variable interest, it could result in the Company being the primary beneficiary of and thus consolidating the entity being evaluated. Evaluation of these criteria requires judgment. For those entities in which it has a variable interest, the Company performs an analysis to first determine whether the entity is a VIE. This determination includes considering whether the entity’s equity investment at risk is sufficient, whether the voting rights of an investor are not proportional to its obligation to absorb the income or loss of the entity and substantially all of the entity’s activities either involve or are conducted on behalf of that investor and its related parties, and whether the entity’s at risk equity holders have the characteristics of a controlling financial interest. The Company is the general partner/manager of and has a variable interest in certain limited partnerships and similar entities. One of the factors that the Company considers in evaluating whether these entities are VIEs is whether a simple majority (or lower threshold) of limited partners with equity at risk are able to exercise substantive kick-out rights. Kick-out rights are generally defined as the ability to remove the general partner/manager or to dissolve the entity without cause. Generally, if the limited partners with equity at risk are not able to exercise substantive kick-out rights, the entity is a VIE unless the limited partners have been granted substantive participating rights. The Company is also the manager of and has a variable interest in certain entities other than limited partnerships. One of the factors that the Company considers in evaluating whether these entities are VIEs is whether the investors have power through voting rights or similar rights (such as those of a common shareholder in a corporation); and if not, whether a single equity holder has the unilateral ability to exercise substantive kick-out rights. If investors do not have power through voting rights or similar rights or a single equity holder does not have the unilateral ability to exercise substantive kick-out rights, then the entity is a VIE. These analyses require judgment. A VIE must be consolidated by its primary beneficiary. The primary beneficiary of a VIE is generally defined as the party who has a controlling financial interest in the VIE. The Company would be deemed to have a controlling financial interest in a VIE if it and its related parties under common control as a group, where applicable, have (i) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. For purposes of evaluating (ii) above, fees paid to the Company are excluded if the fees are compensation for services provided commensurate with the level of effort required to be performed and the arrangement includes only customary terms, conditions or amounts present in arrangements for similar services negotiated at arm’s length. This analysis requires judgment. All intercompany transactions and balances have been eliminated in the Company's consolidated financial statements. |
Use of Estimates | Use of Estimates Preparation of the Company's consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and costs and expenses during the reporting period. The Company makes estimates of its allowance for credit losses, the valuation allowance against its deferred tax assets, discounts and collectability of management fees, the valuation of stock-based compensation, and in determining whether a decrease in the fair value of an investment is an other-than-temporary impairment. The real estate and financial fund management segments make assumptions in determining the fair value of investments in investment securities. Actual results could differ from these estimates. |
Financing Receivables - Receivables from Managed Entities | Financing Receivables - Receivables from Managed Entities The Company performs a review of the collectability of its receivables from managed entities on a quarterly basis, by analyzing future cash flows by managed entity. Management fees are recorded net of a discount to the extent that they are anticipated to be collected in excess of one year. With respect to the receivables from its commercial finance investment partnerships, this takes into consideration several assumptions by management, primarily concerning estimates of future bad debts and recoveries. For receivables from the real estate investment entities, the Company estimates the cash flows through the sale of the underlying properties based on projected net operating income as a multiple of published capitalization rates, as reduced by the underlying mortgage balances and priority distributions due to the investors. |
Investment Securities | Investment Securities The Company’s investment securities available-for-sale, including investments in the CLO and CDO issuers it sponsored, are carried at fair value. The fair value of the CLO and CDO investments is based primarily on internally-generated expected cash flow models that require significant management judgment and estimates due to the lack of market activity and the use of unobservable pricing inputs. Investments in affiliated entities, including its holdings in The Bancorp, Inc. (NASDAQ: TBBK), RSO, Resource Credit Income Fund ("CIF") (NASDAQ: RCIIX), and Resource Real Estate Diversified Income Fund ("DIF") (NASDAQ: RREDX), all of which are affiliated entities, are valued at the closing prices of the respective publicly-traded stocks. The Company sold its investment in Resource Real Estate Global Property Securities ("RREGPS"), a Company-sponsored Australian investment fund, in July 2015. The cumulative net unrealized gains (losses) on these investment securities, net of tax, is reported through accumulated other comprehensive income (loss). Realized gains (and losses) on the sale of investments are determined on the trade date on the basis of specific identification and are included in net operating results. Securities that are held principally for resale in the near term (trading securities) are recorded at fair value with changes in fair value recorded in earnings. |
Hedging | Hedging - Foreign Currency Risk and Forward Contracts The Company has an exposure to foreign currency risk with respect to advances made to CVC Credit Partners that are repayable in Euros (see Note 15). To mitigate the foreign currency risk, the Company has entered into foreign currency forward contracts (see Note 18). Forward contracts represent future commitments to deliver a quantity of a currency at a predetermined future date and rate to manage currency risk. Financial derivatives are initially recognized in the balance sheet at fair value and subsequently measured at their fair value on each balance sheet date. The forward contracts are not designated as qualifying cash flow hedges and, accordingly, any changes in fair value of the contracts are recognized in the Company’s consolidated statements of operations. Similarly, any changes in the fair value of the Euro-based loan receivable are recognized in the consolidated statements of operations. |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2015 consolidated financial statements to conform to the 2016 presentation. |
Recent Accounting Standards | Recent Accounting Standards Newly-Adopted Accounting Principle The Company’s adoption of the following standards during the three months ended March 31, 2016 did not have a material impact on its consolidated financial position, results of operations or cash flows: In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The update requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The guidance was effective for the Company as of January 1, 2016. In January 2015, the FASB issued ASU No. 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates from GAAP the concept of an extraordinary item. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings per share data applicable to an extraordinary item. However, presentation and disclosure guidance for items that are unusual in nature and occur infrequently will be retained. This guidance was effective for the Company as of January 1, 2016. Accounting Standards Issued But Not Yet Effective In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which will replace most of the existing revenue recognition guidance in GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The ASU will be effective for the Company beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Company is in the process of determining the method of adoption and assessing the impact of this ASU on its consolidated financial statements. In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. This guidance, effective for the Company beginning January 1, 2017, is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-02. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting, which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for the Company January 1, 2017 and interim periods within that reporting period. The adoption of ASU 2016-07 is not expected to have a material effect on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The goal of this update is to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This update becomes effective beginning January 1, 2017, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-09. |
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) |
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Supplemental disclosure of cash flow information for the Company is as follows (in thousands, except per share data):
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FINANCING RECEIVABLES (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aging of the Company's Past Due Financing Receivables, Gross of Allowances for Credit Losses | The following table is the aging of the Company’s financing receivables (presented gross of allowance for credit losses) as of March 31, 2016 (in thousands):
The following table is the aging of the Company’s financing receivables (presented gross of allowance for credit losses) as of December 31, 2015 (in thousands):
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Summary of Activity in the Allowance for Credit Losses for the Company's Financing Receivables | The following table summarizes the activity in the allowance for credit losses for all financing receivables (in thousands):
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Gross Financing Receivables Related to the Balance in the Allowance for Credit Losses | The Company’s financing receivables (presented exclusive of any allowance for credit losses) relate to the balance in the allowance for credit losses, as follows (in thousands):
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Information about Company's Impaired Financing Receivables | The following table discloses information about the Company’s impaired financing receivables (in thousands):
|
INVESTMENTS IN REAL ESTATE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Carrying Value of Investments in Real Estate | The Company’s investments in real estate, net, consist of the following (in thousands):
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Schedule of Future Minimum Rental Payments for Operating Leases | The contractual future minimum rental income on non-cancelable operating leases included in properties owned for each of the five succeeding annual periods ending March 31, and thereafter, are as follows (in thousands):
|
INVESTMENT SECURITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the Company's Investment Securities | Components of investment securities are as follows (in thousands):
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Pre-tax Unrealized Gains (Losses) Relating to the Company's Investments in Equity and Collateralized Debt Obligation Securities | Available-for-sale securities. The following table discloses the pre-tax unrealized gains (losses) relating to the Company’s investments in available-for-sale securities (in thousands):
|
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Unrealized Losses Along with the Related Fair Value, Aggregated by the Length of Time the Investments were in a Continuous Unrealized Loss Position | Unrealized losses on available-for-sale securities, along with their related fair value, and aggregated by the length of time the investments were in a continuous unrealized loss position, are as follows (in thousands, except number of securities):
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES AND LOAN MANAGER (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Unconsolidated Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Company's Investments in Investment Vehicles, Including the Range of Interests it Owns | The following table details the Company’s investments in these vehicles, including the range of ownership interests owned (in thousands, except percentages):
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Summarized Operating Data for Unconsolidated Investment | Summarized operating data for CVC Credit Partners is presented below (in thousands):
|
VARIABLE INTEREST ENTITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities, Balance Sheet | The following are the carrying amounts of the assets and liabilities of Pelium that are reflected in the Company's consolidated balance sheets (in thousands):
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Schedule of Variable Interest Entities | The Company has not provided financial or other support to these VIEs and has no liabilities, contingent liabilities, or guarantees (implicit or explicit) related to these VIEs at March 31, 2016. The following table presents the carrying amounts of the assets in the consolidated balance sheets that relate to the Company's variable interests in identified nonconsolidated VIEs that it manages as well as the Company's maximum potential exposure to losses associated with these managed VIEs in which it holds variable interests at March 31, 2016 (in thousands):
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ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Components of Accrued Expenses and Other Liabilities | The following is a summary of the components of accrued expenses and other liabilities (in thousands):
|
BORROWINGS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Facilities and Other Debt of the Company and Related Borrowings Outstanding | The credit facilities and other debt of the Company and related borrowings outstanding are as follows (in thousands):
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Annual Principal Payments on the Company's Aggregate Borrowings Over the Next Five Years and Thereafter | Annual principal payments coming due on the Company’s aggregate borrowings for the five succeeding annual periods ending March 31, and thereafter, are as follows (in thousands):
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Category | The following are changes in accumulated other comprehensive (loss) income by category (in thousands):
Amounts reclassified from accumulated other comprehensive income were reflected in the consolidated financial statements, as follows:
|
NONCONTROLLING INTERESTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||
Activity in Noncontrolling Interest | The following table presents the activity in noncontrolling interests (in thousands):
|
EARNINGS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Components Used in Computation of Basic and Diluted EPS | The following table presents a reconciliation of the shares used in the computation of Basic EPS and Diluted EPS (in thousands):
|
BENEFIT PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Costs for the SERP | The components of net periodic benefit costs for the SERP were as follows (in thousands):
|
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Receivable and Payables and Fees, Dividends and Reimbursed Expenses | The following table details these receivables and payables (in thousands):
|
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Schedule of Fees, Dividends and Reimbursed Expenses from Several Related/Managed Entities | The following table details those activities (in thousands):
|
OTHER INCOME (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income, net | The following table details other income, net (in thousands):
|
FAIR VALUE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company's Asset Recorded at Fair Value on Recurring Basis | The fair value of the Company’s assets and liability recorded at fair value on a recurring basis were as follows (in thousands):
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Additional Information about Assets Measured at Fair Value on Recurring Basis for which the Company Has Utilized Level 3 Inputs to Determine Fair Value | The following table presents additional information about assets which were measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value during three months ended March 31, 2016 (in thousands):
The following table presents additional information about assets which were measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value during year ended December 31, 2015 (in thousands):
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Quantitative Inputs and Assumptions in Determining the Fair Value of Items Categorized in Level 3 | The following table presents the Company's quantitative inputs and assumptions used in determining the fair value of items categorized in Level 3 (in thousands, except percentages):
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Fair Value of Financial Instruments | The fair value of financial instruments required to be disclosed at fair value, excluding instruments valued on a recurring basis, is as follows (in thousands):
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DERIVATIVES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Foreign Currency Forward Contracts | As of March 31, 2016, the Company had the following outstanding foreign currency forward contracts outstanding (in thousands):
|
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Schedule of Interest Rate Derivatives | The table below presents the fair value of the Company's derivative financial instruments, which are included in accrued expenses and other liabilities on the consolidated balance sheets (in thousands):
|
OPERATING SEGMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Operating Segment Data | Summarized operating segment data are as follows (in thousands):
|
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Cash (paid) received: | ||
Interest | $ (401) | $ (399) |
Income tax payments | (1,728) | (65) |
Refund of income taxes | $ 0 | $ 44 |
Dividends declared per common share (in usd per share) | $ 0.06 | $ 0.05 |
Non-cash activities: | ||
Repurchase of common stock from employees in exchange for the payment of income taxes | $ 174 | $ 165 |
Issuance of treasury stock for the Company's investment savings 401(k) plan | $ 302 | $ 150 |
FINANCING RECEIVABLES (Impaired Financing Receivables) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Financing Receivables Without a Specific Valuation Allowance | ||
Impaired financing receivables [Abstract] | ||
Specific Allowance | $ 0 | $ 0 |
Loans and receivables from managed entities – commercial finance | Financing Receivables With a Specific Valuation Allowance | ||
Impaired financing receivables [Abstract] | ||
Net Balance | 0 | |
Unpaid Balance | 0 | |
Specific Allowance | 0 | |
Average Investment in Impaired Assets | 13,788 | |
Rent receivables - real estate | Financing Receivables With a Specific Valuation Allowance | ||
Impaired financing receivables [Abstract] | ||
Net Balance | 0 | 0 |
Unpaid Balance | 0 | 0 |
Specific Allowance | 9 | 5 |
Average Investment in Impaired Assets | $ 0 | $ 0 |
INVESTMENTS IN REAL ESTATE (Investments in Real Estate) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Properties owned, net of accumulated depreciation [Line Items] | |||
Real Estate Investment Property, Net | $ 15,752 | $ 16,022 | |
Rental income | 1,200 | $ 1,200 | |
Hotel property (Savannah, Georgia) | |||
Properties owned, net of accumulated depreciation [Line Items] | |||
Real Estate Investment Property, Net | 9,456 | 9,757 | |
Office building (Philadelphia, Pennsylvania) | |||
Properties owned, net of accumulated depreciation [Line Items] | |||
Real Estate Investment Property, Net | 861 | 877 | |
Total Properties Owned | |||
Properties owned, net of accumulated depreciation [Line Items] | |||
Real Estate Investment Property, Net | 10,317 | 10,634 | |
Real Estate Accumulated Depreciation | 9,894 | 9,752 | |
Partnerships and other investments | |||
Properties owned, net of accumulated depreciation [Line Items] | |||
Real Estate Investment Property, Net | $ 5,435 | $ 5,388 |
INVESTMENTS IN REAL ESTATE (Operating Leases) (Details) $ in Thousands |
Mar. 31, 2016
USD ($)
|
---|---|
Real Estate Investments, Net [Abstract] | |
2017 | $ 1,010 |
2018 | 1,038 |
2019 | 960 |
2020 | 689 |
2021 | 566 |
Thereafter | 315 |
Total | $ 4,578 |
INVESTMENT SECURITIES (Components of Investment Securities) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities | $ 17,706 | $ 19,509 |
Trading securities | 1,442 | 1,451 |
Investment securities, at fair value | 44,758 | 45,672 |
Pelium | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Trading securities | 25,610 | 24,712 |
Investment securities, at fair value | $ 25,610 | $ 24,712 |
INVESTMENT SECURITIES (Pre-tax Unrealized Gains (Losses) Relating to Investments in Available-for-Sale Securities) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Cost or Amortized Cost | $ 20,696 | $ 20,369 |
Unrealized Gains | 111 | 940 |
Unrealized Losses | (3,101) | (1,800) |
Fair Value | 17,706 | 19,509 |
CLO securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost or Amortized Cost | 7,912 | 7,585 |
Unrealized Gains | 111 | 928 |
Unrealized Losses | (229) | (66) |
Fair Value | 7,794 | 8,447 |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost or Amortized Cost | $ 12,784 | 12,784 |
Unrealized Gains | 12 | |
Unrealized Losses | $ (2,872) | (1,734) |
Fair Value | $ 9,912 | $ 11,062 |
INVESTMENTS IN UNCONSOLIDATED ENTITIES AND LOAN MANAGER (Summary Operating Data for Unconsolidated Investment) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of Equity Method Investments [Line Items] | ||
Portion of net income (loss) attributable to the Company | $ 3,133 | $ 2,350 |
CVC Credit Partners | ||
Schedule of Equity Method Investments [Line Items] | ||
Management fee revenues | 19,961 | 16,738 |
Costs and expenses | (16,146) | (14,809) |
Net income | 3,815 | 1,929 |
Portion of net income (loss) attributable to the Company | $ 916 | $ 637 |
VARIABLE INTEREST ENTITIES (Details) - Pelium $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Variable Interest Entity [Line Items] | |
Variable interest entity, ownership amount | $ 5.0 |
Variable interest entity, ownership percentage | 20.00% |
VARIABLE INTEREST ENTITIES (Variable Interest Entities, Consolidated) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Variable Interest Entity [Line Items] | ||||
Cash | $ 18,348 | $ 24,132 | $ 27,521 | $ 33,947 |
Receivables | 3,082 | 3,228 | ||
Investment securities, at fair value | 44,758 | 45,672 | ||
Other assets | 13,781 | 9,733 | ||
Total assets | 204,586 | 211,195 | ||
Accrued expenses and other liabilities | 22,502 | 27,184 | ||
Pelium | ||||
Variable Interest Entity [Line Items] | ||||
Cash | 570 | 377 | ||
Receivables | 2,377 | 2,345 | ||
Investment securities, at fair value | 25,610 | 24,712 | ||
Other assets | 93 | 98 | ||
Total assets | 28,650 | 27,532 | ||
Accrued expenses and other liabilities | $ 766 | $ 99 |
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable and other accrued liabilities | $ 7,762 | $ 7,919 |
Supplemental executive retirement plan (SERP) liability (see Note 14) | 6,297 | 6,454 |
Accrued wages and benefits | 4,283 | 8,036 |
Deferred rent | 2,238 | 2,323 |
Apidos contractual obligation, at fair value (see Notes 7 and 17) | 414 | 615 |
Dividends declared and not yet paid | 1,144 | 1,132 |
Insurance notes | 364 | 705 |
Total accrued expenses and other liabilities | $ 22,502 | $ 27,184 |
BORROWINGS (Credit Facilities and Other Debt) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Borrowings Outstanding | $ 20,597 | $ 20,747 |
TD Bank – secured revolving credit facility | ||
Debt Instrument [Line Items] | ||
Maximum Amount of Facility | 6,997 | |
Borrowings Outstanding | 0 | 0 |
Outstanding letters of credit | 503 | |
Republic Bank – secured revolving credit facility | ||
Debt Instrument [Line Items] | ||
Maximum Amount of Facility | 1,969 | 2,200 |
Borrowings Outstanding | 0 | 0 |
Total corporate and real estate borrowings | ||
Debt Instrument [Line Items] | ||
Borrowings Outstanding | 0 | 0 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Borrowings Outstanding | 10,000 | 10,000 |
Mortgage debt - hotel property | ||
Debt Instrument [Line Items] | ||
Borrowings Outstanding | 9,822 | 9,877 |
Other debt | ||
Debt Instrument [Line Items] | ||
Borrowings Outstanding | 775 | $ 870 |
Letters of Credit | ||
Debt Instrument [Line Items] | ||
Outstanding letters of credit | $ 503 |
BORROWINGS (Senior Notes and Other Debt) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Debt Instrument [Line Items] | ||
Debt instrument, redemption price, percentage | 101.00% | |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Remaining balance | $ 10.0 | |
Interest rate | 9.00% | |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 9.10% | 9.10% |
BORROWINGS (Other Debt - Real Estate and Corporate) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | ||
Borrowings | $ 20,597,000 | $ 20,747,000 |
Mortgage debt | ||
Debt Instrument [Line Items] | ||
Interest rate | 6.36% | |
Debt instrument, periodic payment | $ 71,331 | |
Borrowings | $ 9,822,000 | $ 9,877,000 |
BORROWINGS (Debt Repayments) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 609 | |
2018 | 10,603 | |
2019 | 297 | |
2020 | 276 | |
2021 | 296 | |
Thereafter | 8,516 | |
Total | $ 20,597 | $ 20,747 |
NONCONTROLLING INTERESTS (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Activity in noncontrolling interests [Roll Forward] | ||
Noncontrolling interests, beginning of year | $ 22,356 | |
Net income (loss) attributable to noncontrolling interests | 366 | $ 1,657 |
Noncontrolling interests, end of period | 22,736 | |
Noncontrolling Interests | RAI | ||
Activity in noncontrolling interests [Roll Forward] | ||
Noncontrolling interests, beginning of year | 22,356 | |
Net income (loss) attributable to noncontrolling interests | 366 | |
Other | 14 | |
Noncontrolling interests, end of period | $ 22,736 |
EARNINGS PER SHARE (Reconciliation) (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Earnings Per Share [Abstract] | ||
Basic shares outstanding (in shares) | 20,611 | 22,965 |
Dilutive effect of outstanding director units and stock options (in shares) | 278 | 274 |
Diluted shares outstanding (in shares) | 20,889 | 23,239 |
BENEFIT PLANS (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||
Restricted stock award, number of shares (in shares) | 847,177 | 440,852 |
Restricted stock award, value | $ 4,000 | $ 3,900 |
Chief Executive Officer | SERP | ||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||
Benefits paid | $ 838 | |
Performance Shares | ||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||
Restricted stock award, number of shares (in shares) | 45,308 | 45,306 |
Restricted stock award, value | $ 411 | $ 420 |
BENEFIT PLANS (Components of Net Periodic Benefit Cost) (Details) - SERP - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Interest cost | $ 62 | $ 62 |
Less: expected return on plan assets | (10) | (19) |
Plus: amortization of unrecognized loss | 121 | 106 |
Net cost | $ 173 | $ 149 |
OTHER INCOME (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Other Income and Expenses [Abstract] | ||
RSO dividends | $ 300 | $ 458 |
Interest income | 214 | 104 |
Other expense, net | (7) | (248) |
Other income, net | $ 507 | $ 314 |
FAIR VALUE (Fair Value of Financial Instruments) (Details) - Recurring Basis - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value | ||
Liabilities: | ||
Real estate debt | $ 10,689 | $ 10,618 |
Senior Notes | 12,553 | 12,202 |
Other debt | 775 | 870 |
Total liabilities at fair value | 24,017 | 23,690 |
Carrying Amount | ||
Liabilities: | ||
Real estate debt | 9,822 | 9,877 |
Senior Notes | 10,000 | 10,000 |
Other debt | 775 | 870 |
Total liabilities at fair value | $ 20,597 | $ 20,747 |
DERIVATIVES (Details) |
Mar. 31, 2016
USD ($)
contracts
|
---|---|
Foreign currency forward contracts | Not Designated as Hedging Instrument | |
Derivative [Line Items] | |
Number of Instruments | contracts | 2 |
Notional Amount | $ 2,676,000 |
Foreign currency forward contracts | Designated as Hedging Instrument | |
Derivative [Line Items] | |
Fair Value | $ 0 |
OPERATING SEGMENTS (Narrative) (Details) - Segment |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Revenue, Major Customer [Line Items] | ||
Number of reportable operating segments | 3 | |
Sales Revenue, Net | Customer Concentration Risk | RSO | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 14.40% | 13.60% |
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